IRR to engage EFF, MK on alternatives to increasing VAT and BEE

The Institute of Race Relations (IRR) will this week reach out across the ideological divide to engage the leaders of the Economic Freedom Fighters (EFF) and uMkhonto we Sizwe Party (MK Party) on an alternative to the controversial Value-Added Tax (VAT) increase adopted in the parliamentary vote for the Fiscal Framework last week.

Given these parties’ vocal and commendable commitment to shielding the poorest taxpayers from being squeezed by the government, the IRR sees the potential for a reconsideration of the spending of an estimated more than R100 billion of taxpayers’ money on Black Economic Empowerment (BEE) premiums in public procurement that enrich a connected few at the top, yet leave the poor footing the bill and still excluded from the economy.

Says Makone Maja, IRR Strategic Engagements Manager: “Increasing VAT places even further financial strain on South Africans who are already struggling – especially the poorest people in our society. The debate on increasing VAT is separating the wheat from the chaff in distinguishing public representatives with little regard for the strained economic circumstances of the nation’s households from those determined to ensure that taxpayers are protected from a rapacious state and are granted a fairer deal. On this issue, both the EFF and MK have shown a commitment to easing the financial burden on the most vulnerable.

“It is vital, as some parties who voted against the VAT hike have argued, for alternatives to this damaging VAT increase to be seriously considered. One such alternative is ending all BEE procurement premiums paid by the South African government. Ensuring value for money in public procurement, rather than race-rigged, pro-cadre spending of public money, won’t only remove the necessity of the VAT hike opposed by MK and the EFF, but even allow for VAT to be lowered to 11.5%, as shown in IRR research published in February.

“Having committed themselves to protecting the poorest from an abusive tax rise, MK and the EFF have a unique opportunity to go further and ensure those with political connections to the ruling party can no longer exploit their position to grow even richer at the expense of the poorest. This is what scrapping BEE premiums in public procurement is all about.”

Maja adds: “The cost of BEE to ordinary South Africans has been immense, with those on the lowest incomes seeing their taxes enriching a BEE mafia moving in ruling party circles. In addition, the poor have seen jobs, economic development and investment in their communities being stalled and outright rejected while the ANC desperately tries to convince us that the enrichment of already wealthy elites is for our own good.”

Maja will be writing on behalf of the IRR to Dr John Hlophe, MP, and Mr Julius Malema, MP, as leaders of two important parties in Parliament, requesting a meeting in the coming weeks.

Concludes Maja: “As recent events in Parliament have shown, business as usual is simply not good enough when it comes to dealing with the new political reality South Africans voted for last year. If we as a country are to protect the poor from the abuse of those in power, we must be willing to move beyond the systemic failures of the status quo. We call on MK and the EFF to show their commitment and meet with us.”

Media contact: Makone Maja, IRR Strategic Engagements Manager Tel: 079 418 6676 Email: makone@irr.org.za

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