The Congress of South African Trade Unions (COSATU) has expressed concern over the legal challenges brought forward by the Democratic Alliance (DA) and the Economic Freedom Fighters (EFF) against the controversial Value-added-Tax (VAT) increase, warning that such moves could destabilise the country’s fiscal and governance systems.
In an interview with Newzroom Afrika, COSATU’s Parliamentary Coordinator, Matthew Parks, made it clear that while COSATU opposes the VAT hike on political and economic grounds, turning to the courts could have severe unintended consequences.
“At a political level, we oppose a VAT hike,” Parks said. “We don’t support any tax hikes which hurt the working class or the poor, or the middle class.”
Despite COSATU’s opposition to the increase, Parks argued that legal intervention is an inappropriate tool that could plunge the state into crisis.
“Our fear is to do it right now. It can really plunge the budget of the state into a crisis. It can plunge Parliament into a governorship crisis,” he warned. “We don’t think we should be elevating politics above the function of the state or stimulating the economy, creating jobs and so forth.”
IOL previously reported that the DA and EFF have taken the VAT issue to court to challenge the procedures followed in Parliament to adopt the fiscal framework. However, Parks believes those legal arguments lack substance.
“We don’t think that one has got legal standing,” he said, referring to the committee procedures. “The finance committees exhausted the committee's report. They went through it chapter by chapter.”
Parks stressed that political parties should have used parliamentary channels to contest the budget rather than resorting to litigation.
“The better option would have been simply for Parliament to oppose passing the budget, to have amended the budget, to remove the VAT hike,” he said.
He also took a hard stance on political accountability: “Politicians must come to the party. They must learn to grow up. They must learn how to negotiate. Their failures should not be condoned and they should not be outsourced to the rest of us. They shouldn’t be outsourced to courts.”
According to Parks, the lack of maturity in the new Government of National Unity (GNU) is partly to blame for the impasse.
“The ANC has always had an outright majority. Parties like the DA and other parties who are in cabinet are used to only being in opposition,” he said. “We need these parties to adjust quickly because we have serious challenges as a society.”
When asked if a legal victory by the EFF and DA could benefit South Africans, Parks remained cautious. “It depends on how the judge considers it, but then it puts into jeopardy a wage increase. In fact, it'll suspend or stop the social grant increases. It just becomes very, very messy.”
Ultimately, COSATU sees the current path as unsustainable: “We’re playing Russian roulette with the function of the state and, of course, with the well-being of society.”
“Politicians should do what they're paid to do, which is to govern and to find solution. They should not take all of society along with them on the political roller coasters,'' he said.
According to Finance Minister Enoch Godongwana, VAT will increase by May 1.
Responding to court action undertaken by the Economic Freedom Fighters (EFF) and Democratic Alliance (DA), Godogwana noted that failing to raise VAT next month could cause severe harm to state finances.
He said the consequences would be severe and far-reaching.
"Government would be immediately forced either to cut expenditure or increase borrowing," he said.
As per Godogwana's affidavit, the first 0.5 percentage point will increase from May 1, 2025 while the second 0.5 percentage point taking effect from April 1, 2026.