The Federation of Unions of South Africa (FEDUSA) and the Congress of South African Trade Unions (COSATU) have both expressed their support for the government’s decision to postpone Finance Minister Enoch Godongwana’s 2025 Budget speech to March.
FEDUSA praised the move, describing it as a reflection of the complexities within the coalition government, underscoring the importance of thorough deliberations on fiscal policies that affect all South Africans. They pointed out that the delay stemmed from ongoing discussions within the Government of National Unity (GNU), particularly regarding proposed tax adjustments, including the contentious suggestion to increase the Value-Added Tax (VAT) by 2%, from 15% to 17%. The union voiced its consistent concern about the burden such hikes would place on workers and low-income households, especially amid the ongoing economic crisis and escalating living costs. They commended the government’s commitment to transparency and inclusive dialogue, emphasizing that this additional time could facilitate the development of more equitable fiscal strategies that prioritize economic growth, job creation, and the welfare of citizens. FEDUSA reiterated its readiness to engage constructively with all stakeholders to ensure the forthcoming budget meets the needs of South Africa’s workforce.
COSATU also welcomed the postponement, acknowledging that while it wasn’t an ideal way to process budgets, the delay had successfully prevented the regressive VAT hike from going ahead. They celebrated the government’s political maturity in responding to their concerns and halting the increase, which, they argued, would have created an unbearable financial strain on working-class families already grappling with rising costs of living. COSATU emphasized that a rushed budget would have faced rejection in Parliament, possibly leading to a constitutional crisis and unnecessary political chaos. They underscored the importance of having a more thoughtful, well-considered budget that addresses the needs of ordinary South Africans.
In their statement, COSATU also proposed alternative strategies to ensure the state could fund public services and stimulate the economy without relying on a VAT increase. These included a call for an immediate additional R3 billion for the South African Revenue Service to improve tax compliance, boosting collections from 64% to 67%. They also suggested engaging with public and private financial institutions to take on a greater share of financing for infrastructure, small businesses, industrialization, and job creation. COSATU assured that it would continue its discussions with the government, especially with the Presidency and Treasury, to ensure that the progressive initiatives proposed in the budget were upheld, while pushing for more pragmatic revenue solutions.
Looking ahead, COSATU expressed confidence that, with continued dialogue, a budget that supports state capacity, fosters economic growth, creates jobs, and protects the most vulnerable could be presented to Parliament on March 12.
