‘Introduce apartheid tax instead of a VAT hike’: EFF

EFF treasurer-general Omphile Maotwe has suggested options for the government to raise revenue instead of increasing value added tax (VAT).

These include introducing what the party called an “apartheid tax” targeting people who inherited wealth during the era of oppression.

The tax, Maotwe said, would offset the proposed 0.5 percentage point VAT hike that has caused friction in the government of national unity (GNU).

“That will give you far more money than the R28bn they're looking for,” she said.

“But the easy target is the poor. We can't afford to put bread on the table. Imagine with the VAT increase. Our people will die from poverty. The triple oppression of poverty, inequality and unemployment is going to get worse.”

Maotwe was speaking outside the Western Cape High Court on Tuesday where the court heard the urgent case brought by the DA and EFF to halt the VAT increase, due to come into effect on May 1. The VAT hike is expected to help the government raise R28bn.

Finance minister Enoch Godongwana has emphasised the VAT increase is necessary to fund essential services in health, education, transport and security. According to court papers filed by Godongwana, the VAT hike was the only sustainable revenue proposal for the fiscus, with no room for further borrowing or detrimental spending cuts.

Maotwe believes the government should instead target the rich. She suggested implementing a wealth tax, targeting trusts and luxury properties that are not being taxed.

“We are telling him he doesn't need to increase VAT. He needs to tax the rich. Introduce a wealth tax. There are many trusts that hold luxury properties which are not being taxed, but they use the portfolios to apply for loans at the banks.”

Maotwe is also pushing for an increase of the corporate tax rate from 27% to 29%. She argued companies are making profits.

“It's not true the companies are not making money. They are making money. The issue is illicit financial flaws, underreporting of profit and other factors. We haven't given more money to the SA Revenue Service (Sars). The service should be able to collect that money. Sars said there is R800bn that is outstanding to collect. Even if Sars were to get only 10% of that, it would help the minister's problems. The issue is not that there are no other avenues. The problem is that the minister is scared to touch the rich.”

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