FINANCIALLY overstretched South Africans may get some relief if the South African Local Government Association (SALGA) in KwaZulu-Natal gets its way with the proposed zero-rated VAT on essentials like water and electricity.
Sabelo Gwala, director of operations of SALGA in KZN, warned that a blanket VAT (Value-Added Tax) would have far-reaching ramifications for the country and the.
“As SALGA, we are saying, why don't we have a staggered approach where we say goods that are directly impacting the consumer remain where they are, or are zero-rated? And goods which are luxury goods, those can be increased by 2%,” said Gwala during an interview on SAfm.
His comments came ahead of the revised budget speech by Finance Minister Enoch Godongwana, due on 12 March, following the February 19 postponement.
The postponement was owed to the impasse between political parties who formed part of the Government of National Unity (GNU) and disagreed over the 2% increase of VAT. The current VAT stands at 15%.
“Zero rating is an option, but sometimes you have to accept that not all goods are the same. Goods that are zero-rated will find its way to be increased in terms of its price,” said Gwala.
Gwala said they made such proposals to the relevant department.
“This is an old SALGA proposal, where we say these products are basic goods that citizens need to see as zero-rated. But we can’t be irresponsible to not give a way out to a minister (finance) who needs an 80% debt increase.”
SALGA is an autonomous association of all 257 municipalities, consisting of a national association with one national office and nine provincial offices.
Ish Prahladh, the president of the eThekwini Ratepayers and Residents (ERR), welcomed the SALGA’s proposal.
“This is what we have been saying for many years. The taxpayers are overburdened by VAT. We are feeling enormous pressure, and some people have fallen into depression and ruin. We welcome the proposal made by SALGA,” he said.
Prahladh said it baffled him why the government placed a VAT blanket approach, which he argued, had a rippling effect on the downtrodden, including those who relied on social grants.
"It does not make sense why an elderly pensioner who relies on a pension should be charged for using water and electricity. Such services should be rendered to the elderly for free,” he said.
Turning to the ongoing water crisis in eThekwini, Prahladh asserted that the ERR would increase pressure on the ANC-IFP-EFF governing coalition to resolve the issue, deeming the current state of affairs unacceptable. “We will continue to fight until something happens. It is unacceptable that the city has, for years, failed dismally to fix the water issues. We are paying for a service that we are not using," he stated.
“It is unacceptable that the city has, for years, failed dismally to fix the water issues. We are paying for a service that we are not using. We will not allow that as ratepayers associations in eThekwini,” said Prahladh.
The Treasury could not be reached for comment.
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