The Federation of Unions of South Africa (FEDUSA) and Congress of South African Trade Unions (COSATU) said that they welcome the government's decision to postpone Finance Minister Enoch Godongwana 2025 Budget speech to March.
Fedusa said that this unprecedented move reflects the complexities inherent in a coalition government, while highlighting the importance of thorough deliberation on fiscal policies that impact all South Africans. “The postponement arises from ongoing discussions within the Government of National Unity (GNU) regarding proposed tax adjustments, notably the suggested 2% increase in Value-Added Tax (VAT) from 15% to 17%.”
Fedusa added that they have consistently expressed concern over tax hikes that disproportionately affect workers and low-income households, especially amidst the prevailing economic challenges, including a crippling cost of living crisis. “We commend the government's commitment to transparency and inclusive dialogue, as evidenced by the decision to delay the budget presentation to achieve consensus among coalition partners. FEDUSA remains hopeful that this period will allow for the development of equitable fiscal strategies that prioritise economic growth, job creation, and the welfare of all citizens.”
The union said it stands ready to engage constructively with all stakeholders during this critical time to ensure that the forthcoming budget reflects the needs and aspirations of the South African workforce.
COSATU said that it welcomes the postponement of the tabling of the 2025/26 Budget. “Whilst this is not the most elegant way to process budgets, the Federation is pleased that it and others’ interventions to stop a regressive 2% VAT hike bore fruit. It is a sign of political maturity that the government responded positively to these calls and stepped back from the precipice.”
“It is better that government experiences some badly needed humbling and goes back to the drawing board than to have rushed a Budget that not only would have been rejected in Parliament, potentially creating a constitutional crisis and unnecessary political theatrics we could do without, but most importantly would have been an unbearable burden upon working-class families who are already heavily in debt, battling to cope with the rising costs of living and whose meagre wages have frequently not kept pace with inflation,” added COSATU.
COSATU said that they tabled several common-sense alternatives to the government to a VAT hike to ensure the state has the resources it needs to fund public and municipal services, stimulate the economy and slash unemployment. “These include providing the South African Revenue Service with an immediate additional R3 billion to boost tax compliance from 64% to 67%, thus generating the R60 billion needed. Engagements must also take place with public and private financial institutions to shoulder a greater portion of the financing required to boost infrastructure, SMMEs, industrialisation, exports and job creation than the fiscus can afford.”
COSATU added that it will continue to engage the government, and in particular the Presidency and Treasury, to ensure that the many progressive allocations in the proposed Budget are retained and defended whilst simultaneously providing more sober revenue proposals that will ensure the state is able to collect the taxes already due to it.
COSATU said that they are confident that if such engagements are approached from a perspective of finding solutions, then a Budget that capacitates the state, unlocks economic growth, creates jobs and protects the vulnerable can be tabled at Parliament on 12 March.
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