ED­I­TOR’S NOTE: No end to eco­nomic woes hit­ting the work­ing class hard­est

The Sunday Independent - - METRO - ZINGISA MKHUMA [email protected]

WHEN Pres­i­dent Cyril Ramaphosa took over as CEO of South Africa Inc, there were high hopes our eco­nomic woes were al­most over.

It was as­sumed the prob­lems at the SA Rev­enue Ser­vice of un­der­col­lec­tion and late pay­ments for VAT re­funds would be speed­ily re­solved, and en­trepreneurs and big busi­ness would thrive and cre­ate more jobs.

South Africans were op­ti­mistic and the rand re­sponded in kind.

The poor be­lieved food prices would even­tu­ally come down, so they wouldn’t have to spend the lit­tle they had on ba­sic ne­ces­si­ties. Alas, that was never to be. Ramaphosa’s rise was fol­lowed by in­creases on ev­ery­thing con­ceiv­able.

Then to add even more to our woes, we were slapped with a 1% VAT in­crease, which meant ev­ery com­mod­ity went up. From food to bank ser­vices, from lawyers’ fees to school fees, VAT in­creases take a huge por­tion from our in­comes.

There is no es­cap­ing it and, as to be ex­pected, the work­ing classes are hard­est hit be­cause not a sin­gle busi­ness in­creases its ser­vices by a cor­re­lated 1%. For busi­nesses, VAT hikes are an op­por­tu­nity to cash in on vul­ner­a­ble con­sumers who would never chal­lenge them and take to the streets in protest.

Re­minds me of my first en­counter with the late Chris Hani.

We met on the day then min­is­ter of fi­nance Derek Keys was about to give his bud­get speech in Par­lia­ment.

All par­ties had been un­banned, the state of the econ­omy was dire and there was spec­u­la­tion the gov­ern­ment would in­crease VAT.

I re­mem­ber Hani fum­ing that the poor were go­ing to be hard­est hit, at a ta­ble in the then Yard of Ale, in the Mar­ket The­atre Precinct.

He re­minded us that VAT had been in­tro­duced as a stop-gap des­per­ate mea­sure to boost eco­nomic growth un­der apartheid.

VAT, we were told then, was not go­ing to be a per­ma­nent fea­ture and as soon as the econ­omy grew, it would be scrapped be­cause it had an ad­verse im­pact on ba­sic food­stuffs and ser­vices. But Keys left it un­touched. Fast-for­ward to 2018, where un­em­ploy­ment, es­pe­cially among the youth, is giv­ing us sleep­less nights, the gov­ern­ment in­creases VAT.

Now, this week, it is the repo rate. Where would Hani be in all this? I won­der. At the rate things are go­ing, 10 years from now the poor and un­em­ployed will go to bed hun­gry be­cause the work­ing classes, es­pe­cially the black mid­dle class that is still pay­ing black tax over and above PAYE, will be wiped out.

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