The South African Communist Party (SACP) has hailed the National Treasury’s recent decision to reverse the proposed increase in the Value-Added Tax (VAT) rate, marking a significant victory for the working class as the nation grapples with rising living costs.
Announced by Finance Minister Enoch Godongwana on Thursday, the VAT rate will remain at 15% from 1 May 2025, a decision made after extensive negotiations with political parties and parliamentary committees.
While the reversal provides relief to households by easing financial strain, it also results in a R75 billion revenue shortfall for the government.
This reversal comes in the wake of a court challenge led by the opposition parties, the Democratic Alliance (DA) and the Economic Freedom Fighters (EFF), which exerted considerable pressure on the government. The planned VAT increase had been contentious, with many advocating against it due to its potential burden on the already strained financial circumstances of South African households.
The party sees this decision as a significant victory for the working class, which has been achieved through persistent mobilisation, mass action, and principled resistance.
Dr Alex Mohubetswane Mashilo, Central Committee Member, national spokesperson, and Political Bureau Secretary for Policy and Research, highlighted the importance of this achievement, stating, “The reversal of the VAT increase is not a gift from above, but a concession forced through struggle from below. It is an outcome of the militant unity of the working class and its allies.”
While the SACP celebrates the success, it warns against complacency and stresses the need for continued struggle to ensure that the reversal does not become a pyrrhic victory.
The party calls for a broad and unified effort to prevent the National Treasury from punishing the working class through further austerity measures. The SACP has long opposed VAT increases, viewing them as harmful to the working class and poor.
“The proposed VAT increase will deepen the crisis of social reproduction confronting the working-class and poor households,” the party stated in February 2024.
The SACP’s stance was reiterated in their post-Political Bureau statement following the 2025 Budget Speech, where they condemned the regressive nature of VAT, saying it “shifts the burden of the crisis onto the shoulders of the poor.”
Moreover, the SACP’s ongoing opposition to neo-liberal economic policies remains firm. The party calls for a more progressive tax framework, the introduction of a wealth tax, and greater support for industrialisation. Mashilo added that the SACP’s fight extends to opposing illicit capital flows and profit-shifting tactics.
The party’s continued resistance to austerity measures is also clear.
“Austerity has contributed in no small measure to pushing South Africa into a crisis of economic stagnation, characterised by low growth rates,” the SACP argued, warning that austerity would only worsen the economic conditions for the working class.
The party expressed concern that the National Treasury could retaliate against the reversal by scaling back measures aimed at supporting lower-income households.
“The decision not to increase VAT means that the measures to cushion the lower-income households against the potential negative impact of the rate increase now need to be withdrawn and other expenditure decisions revisited,” the Treasury said, indicating potential future austerity measures.
Throughout 2024 and 2025, the SACP, alongside COSATU and other progressive formations, organised numerous protests against austerity and VAT increases.
These included demonstrations on 12 March 2025 across multiple provinces, a march to Parliament on February 20,2025, and a series of actions leading up to the 2025 Budget Speech. The protests were united in their demand for a “progressive, people-centred budget that addresses the needs of the working class.”
The SACP remains resolute in its opposition to austerity measures and tax policies that disproportionately affect the poor.
“We reiterate: the reversal of the VAT increase is a victory that must be protected and built upon, not allowed to be undermined by austerity-driven decisions,” said Mashilo.
Meanwhile, the EFF has called for the immediate resignation of Godongwana and the Director-General of the National Treasury following the withdrawal of the controversial 2025 Budget.
The EFF accuses the Minister and Director-General of “constitutional failures” and mishandling the budget process, which the party says has “plunged the country into a deeper crisis.”
EFF spokesperson Sinawo Tambo criticised the National Treasury for being “obsessed with an unscientific fiscal anchor strategy” instead of addressing urgent issues like unemployment and economic growth.
The EFF has called for the Speaker of the National Assembly to release all correspondence from the Minister of Finance and to convene a meeting of political leaders to address the crisis. They are open to a written out-of-court settlement proposed by Godongwana but insist on a “full withdrawal and reset of the budget process.”
Politics
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