Social unrest warning for South Africa

The uMkhonto weSizwe (MK) Party has threatened country-wide protests if the revised budget—which will be presented this week on Wednesday (12 March)—raises value-added tax (VAT).  

In the initial budget proposal, Finance Minister Enoch Godongwana suggested a two-percentage-point increase in Value Added Tax (VAT), among other measures.

This proposal faced significant opposition from the Democratic Alliance (DA) and other political parties, leading to an unprecedented last-minute cancellation of the February budget speech.

Godongwana aimed to implement the VAT increase to raise R60 billion to pay for the government’s critical expenditures this year.

These include salary increases for civil servants, infrastructure projects, school feeding programs, early childhood development initiatives, and an extension of the Social Relief of Distress (SRD) grant.

According to Godongwana, an additional R35.2 billion in funding is required to extend the SRD grant until March 2026.

The Sunday Times reported that the government of national unity (GNU) clearing house had agreed to a smaller VAT hike of 0.5%pts. 

However, following the report, the DA said that no agreement had been reached and that negotiations were still ongoing because the ANC had not accepted any of the DA’s terms.

As it stands, Godongwana is still expected to present the revised budget to the nation on Wednesday (12 March).

However, the risks of hiking VAT have now worsened, as the MK Party has threatened nationwide protests if any increase is budgeted.

MK Party parliamentary whip Mzwanele Manyi warned that South Africa “would be brought to a standstill if the government proceeds with a proposed increase in value-added tax (VAT).”

The party argues that such a move would place an unbearable burden on the poor.

Speaking to Newzroom Afrika, the party’s National High Command Economic Transformation Sub-Committee chairperson, Thanti Mthanti, said the tax hike would worsen inequality and economic hardship for millions of low-income households.

“This targets poor people,” Mthanti said. “The minimum wage in this country is about R4,500, and most of that is spent on transport and food.”

Mthanti dismissed the Finance Minister’s justification that the increase is necessary to fund the Social Relief of Distress (SRD) grant, calling it “a self-serving argument based on incompetence.”

He argued that the grant was already budgeted for and that the Treasury was using the issue to play political games and shift the burden onto vulnerable communities.

“The additional expenditure he’s looking to fund has nothing to do with the SRD grant,” he said. “Treasury has been trying to push the cancellation of the SRD grant — it’s just a political manoeuvre.”

Mthanti said South Africa does not have a spending crisis but a growth crisis, and the solution lies in boosting economic expansion, not cutting income for the poor. “If the South African economy had grown at 3%, we’d have no fiscal crisis,” he said.

He echoed Manyi’s warning and said that if the VAT hike is implemented, the MK Party will mobilise mass protests to bring the country to a halt.

The MK Party said the government could raise money to fund the budget without increasing VAT.  

It has proposed raising the corporate tax by one percentage point, introducing a wealth tax for the top 1% of earners, and capacitating the South African Revenue Service (SARS) so it can decrease its R800 billion tax gap.