Treasurer-general of the Economic Freedom Fighters (EFF) Omphile Maotwe has called upon the South African government to consider an ‘apartheid tax’ in lieu of the recently approved 0.5 percentage point increase in Value Added Tax (VAT), reports Cape Town Etc.
This proposition surfaced during a public hearing at the Cape Town High Court on Tuesday, where both the EFF and the Democratic Alliance (DA) formally opposed the VAT hike adopted by Parliament earlier this month.
Finance Minister Enoch Godongwana has staunchly defended the VAT increase as a necessary measure to address a substantial budget deficit, warning that delaying the action could have detrimental effects on the nation’s finances.
However, Omphile argues that the rationale behind the proposed VAT hike is fundamentally flawed.
Speaking with Newzroom Afrika after the court proceedings, Omphile highlighted a glaring discrepancy in the government’s financial expectations. ‘The minister says he’s short of R28 billion in his budget, and that’s why he’s increasing the VAT. But the reality is that the VAT increase will only yield R13.5 billion, leaving him still significantly short,’ he explained.
Instead of taxing the impoverished, who struggle to afford basic necessities, Omphile advocates for a shift in policy that would target the wealthiest members of society and large corporations.
‘You’ve got the corporate tax rate, which has decreased from 29% to 27%. We’re calling for it to be raised back to 29%. It’s simply untrue that companies aren’t making money; the issue revolves around illicit financial flows and the underreporting of profits,’ he asserted.
Maotwe pointed out that the South African Revenue Service (SARS) has the potential to recover R800 billion in unpaid taxes.
‘If SARS could reclaim just 10% of that, it would effectively resolve the minister’s budgetary issues. The primary problem lies not in a lack of revenue sources but rather in the hesitance to tax the affluent,’ he stated.
He further articulated his concern regarding wealth inequality in the country, pressing for the introduction of a wealth tax on high-value properties that remain untaxed.
“There are numerous luxury properties that individuals can leverage for lucrative loans. The banks are well aware of these portfolios but they continue to evade taxation,” Omphile noted.
In a poignant critique of the legacy of apartheid, Maotwe proposed an ‘apartheid inheritance tax’ on individuals who inherited wealth during the apartheid era, arguing that this could generate considerably more revenue than the R28 billion the government is currently seeking.
‘Our plea is for the minister to reconsider his stance. The poor already cannot afford to put bread on the table, and this VAT increase will only exacerbate the dire situation of poverty, inequality, and unemployment,’ he lamented.
The EFF representative expressed disappointment over the lack of responsiveness from the government in addressing these concerns.
“We were not heard in the committee discussions, and the report was adopted in what we believe is an unlawful manner. We have written to the Speaker to bring this matter to her attention,” Omphile concluded.
First published by: Cape Town Etc
Words compiled by: Sibuliso Duba
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