Pensioners who are surviving on the government-funded old age grant of just R2,190, have expressed bewilderment at National Treasury’s proposed two percentage point VAT increase, which was recently shot down forcing the Budget Speech to be postponed for the first time.
Finance Minister Enoch Godongwana took centre stage on Wednesday when Cabinet ministers from the multi-party Government of National Unity rejected his proposal, forcing Treasury to go back to the drawing board, in an unprecedented move. The new Budget Speech will now be delivered on March 12.
For pensioners in rural areas, who have been living from hand to mouth, they say an additional tax burden would prove to be a significant blow to their livelihoods.
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In a telephonic interview with IOL, Eunice Mokgatle, 78, from a small village in the outskirts of Mafikeng, expressed frustration over the proposed increase in VAT as the price of food was already through the roof.
"We are not living, we are merely surviving," Mokgatle complained.
"Everything is more expensive now. The little money I get from my pension is barely enough to buy food and medicine," she said.
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From food and clothing to transportation and healthcare, a wide range of necessities will be impacted if the VAT increase is implemented. Treasury has revealed in its proposed Budget Speech, that a VAT increase of 2% would have resulted in R58 billion for the fiscus, which would have been used to fund the employment of public servants - including teachers, doctors and frontline workers, while also enabling government to improve its rail network and to implement its early childhood development policy.
However, the effects of the proposed VAT increase are particularly noticeable for poor people living in rural areas, where access to reasonably priced goods and services can commonly be restricted.
Despite the government's proposal to expand the list of zero-rate foods to include dairy liquid blends, canned vegetables, and a range of meat products from pigs, goats, sheep, and fowl. For the elderly, however, who will have to commute on dusty dirt roads and pay more for transport, this feels like a smack in the face.
"The government needs to do more to fix the important things like roads, electricity, and safety," says Kwabe Ntshingile, a resident of KwaSimamane in Ndwedwe, in rural KwaZulu-Natal.
"They need to increase the grants and provide more assistance like mobile clinics, clean water in the taps."
Treasury had mooted a R150 increase to the old age grant as a measure to counter the VAT increase. This would have taken the old age and disability grant to R2,350.
In the speech, Godongwana also increased Child Support and Foster Care Grants, along with an extension of the Social Relief of Distress (SRD) grant. The Child Support Grant will increase by 9.4% to R580 per month per child, helping families cope with rising living costs. The Foster Care Grant will increase by R80 to R1,260 per month, providing additional support to caregivers.
The SRD grant, introduced during the Covid-19 pandemic, has been extended until March 2026, providing financial assistance to unemployed individuals. However, these measures may not fully address poverty and inequality in South Africa.
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