'You are playing with fire,' Cosatu warns govt on VAT increase

Johannesburg – Trade union federation Cosatu has rejected the proposed one percentage point hike in Value Added Tax (VAT) that was announced by former finance minister Malusi Gigaba last week.

The federation, which held a media briefing on Thursday following its three-day central executive committee meeting, said it rejected the increase, along with a hike in the fuel and road accident fund levies.

"This is a way of forcing the workers to pay for the sins of others," said Cosatu general secretary Bheki Ntshalintshali.

He said the federation wanted the National Assembly to either reject the proposal or to expand the basket of zero-rated goods. Gigaba announced that 19 foods would be listed as zero-rated, including maize meal, brown bread, beans and rice.

Cosatu said it hoped Parliament would reject the VAT proposal outright, or spend more than two weeks debating whether it was the right thing to do for South Africa.

READ: Cabinet to consider more zero-rated goods after VAT hike

"We are not alone in this. Several non-government organisations are seeking to be convinced that government had no other option,” said Ntshalintshali.

Cosatu president Sdumo Dlamini said the federation had been calling for a wealth tax, but was often ignored. Yet, a VAT increase was introduced for the first time since the early 1990s.

"There has been no VAT increase because we fought, they have not been touching this area. We are reminding our government [that] you are playing with fire on this one, we are not going to keep quiet about it," said Dlamini.

Ntshalintshali said it was a misconception to say the poor only used certain goods, explaining that there had been an evolution in the kind of goods South Africans used on a day to day basis.

"Take sanitary towels, people are struggling to even get them at school now. If you VAT them it would make their lives even more difficult," he said.

Increasing petrol also meant that other goods were affected, including foods that had been declared zero rated, Ntshalintshali added.