IRR to DA, FF+, ACDP: Opposing VAT hike important, but scrapping tax-funded BEE premiums vital

The IRR will this week be writing to the leaders of the Democratic Alliance (DA), Freedom Front Plus (FF+), and the African Christian Democratic Party (ACDP), to set out why scrapping BEE premiums in public procurement policies could create the fiscal headroom not only to avoid the controversial Value-Added Tax (VAT) increase, but in fact to lower VAT to 11,5%.

Last week, the IRR approached the parliamentary leaders of the Economic Freedom Fighters (EFF) and the uMkhonto weSizwe Party (MK) on the same issue. The substance of the IRR’s correspondence with these parties, neither of which is ideologically aligned with the IRR, was to argue that scrapping pro-poverty, elitist BEE premiums in public procurement could relieve tax pressures on the poorest South Africans.

Says Hermann Pretorius, IRR Head of Strategic Communications: “As the IRR proceeds in its work of constructing a pro-growth societal coalition, which includes political parties, we are this week reaching out to the DA, FF+, and the ACDP – parties which voted against the VAT increase, and have been critical of BEE.

“Over the coming weeks and months, the debate about raising VAT will continue, and we will hear the claim that there were no fiscal alternatives to forcing people to pay more tax every time they bought something. However, as the IRR’s research shows, this is a lie – and we are reaching out to political parties to encourage them to call out this lie with the evidence that reveals how BEE premiums raise the tax burden on decent, hard-working people across the country.”

The fiscal cost of these premiums is set out in the document, Cut VAT & BEE, the second paper in the 2025 Blueprint for Growth series, the IRR’s flagship reports on how South Africa can achieve 7% economic growth per year.

The IRR will be writing to the parliamentary leaders of the three parties, John Steenhuisen, Rev. Kenneth Meshoe, and Dr Corné Mulder.

Media contact: Hermann Pretorius IRR Head of Strategic Communications Tel: 079 875 4290 Email: hermann@irr.org.za

Media enquiries: Michael Morris Tel: 066 302 1968 Email: michael@irr.org.za