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