The South African Communist Party (SACP) has, in advance, condemned and rejected the upcoming Budget if it entails an increase in value-added tax (VAT), and is instead calling for the budget to facilitate large-scale employment creation through broad-based industrialisation.

Finance Minister Enoch Godongwana will on Wednesday table his first Budget under the Government of National Unity.

There are reports that Godongwana may be considering raising value-added, personal-income and corporate taxes to offset a revenue shortfall and support the government’s efforts to stabilise its debt.

“This has far-reaching political implications. The attempt to justify a VAT increase under the guise of the Social Relief of Distress Grant, whose unemployed beneficiaries have been significantly reduced through austerity-driven red tape, is unfathomable. The unemployed – both those actively seeking work and those discouraged after years of looking for work without success under 28 years of neoliberal policy failure – must not be used as ‘VAT-increase footballs," the SACP noted.

The party pointed out that the May 2024 election manifesto that it endorsed committed the government to tackling the cost-of-living crisis by prioritising “food security, including through VAT exemption on essential items” – not increasing VAT.

The SACP pointed to a scientific perspective, saying increasing VAT disproportionately hurts the working class and poor.

The SACP is expecting a Budget that will advance the implementation of the National Health Insurance and strides towards a comprehensive social security system by advancing the introduction of a universal basic income grant.

The SACP wants National Treasury to introduce a wealth tax and take a more progressive tax approach, focusing on generating revenue from the rich to fund development and key priorities amid the high rates of inequality.

It said this measure was essential for redistributing resources and addressing the deeply entrenched disparities in income and opportunity.

It will also ensure that the burden of funding public services was more equitably shared, promoting social cohesion and shared economic growth in line with the Freedom Charter’s clarion call, “The people shall share in the country’s wealth”, it added.

The SACP said government must lead by example by investing directly in the economy, rather than relegating key leaders to “uncritical marketing agents” for private capital.

“Finally, a government that defers its solutions to unelected private capital betrays the very people it is meant to serve. For almost every problem – whether in electricity, rail, ports, water, or elsewhere – ‘the private sector is the solution’ is uncritically claimed. Although it does deal much with policy capture, critically, the Report of the Commission of Inquiry into State Capture highlights the significant role played by the private sector, including Global North-controlled multinational auditing and consultancy firms, in crippling major public entities such as Eskom and Transnet, and in driving the State capture agenda at key public institutions such as the South African Revenue Services,” it highlighted.

The SACP explained that a critical analysis of the commission’s findings revealed how “unscrupulous” private capital interests, through collusion with corrupt and capturable elements in the State, have actively contributed to the deterioration of public services and the erosion of State capacity in pursuit of profits.

“The uncritical narrative that the private sector is the solution conveniently ignores this track record of plunder and destabilisation. Instead of this agenda, greater focus must be on rebuilding State-owned entities through recapitalisation, democratic control and accountability to the people,” the SACP said.