VAT increase a responsible step towards economic stability – IFP’s Velenkosini Hlabisa

Inkatha Freedom Party (IFP) president Velenkosini Hlabisa said on Monday while the expected VAT increases are not desirable, the party supportes the 2025 Budget under the current circumstances and with conditions.

The IFP was one of the parties that voted with the African National Congress (ANC) to pass the Budget.

Advertisement Briefing the media, Hlabisa highlighted that the party would hold government accountable to ensure that VAT increases do not disproportionately burden the poor and working-class South Africans, saying it would continue to advocate for pro-poor economic policies.

He said the IFP’s identity in the Government of National Unity (GNU) remained intact, and added that “the party is not in the GNU to carry the bags of the ANC or the Democratic Alliance”.

Advertisement “…we weren’t there to conform to the views of one party or another, we have our own policy agenda and our own way of doing things. The IFP entered the 2024 elections accepting that it was the most crucial elections since the dawn of democracy,” he said.

Hlabisa said the IFP remained committed to ensure the VAT increases were a short-term intervention for long term fiscal relief.

“…therefore, we must implement stricter oversight mechanisms within the GNU to prevent wastage and corruption, ensuring that VAT revenue is used efficiently and for the intended purposes,” he stated.

The IFP supported the Budget on the basis that the VAT increase is temporary and will be done away as soon as more viable economic income streams are secured.

“As we support the Budget, we remain committed to accountability for effective and transparent fiscal management. We need to tighten the loopholes; one such loophole is the R800-billion that is not currently being collected by Sars. Everything must be done to ensure Sars is capacitated to collect these billions owed to the fiscals,” Hlabisa said.

He said in the light of country’s fiscal challenges, the IFP understood the VAT increase was a necessary measure to bolster government revenue and ensure continued service delivery.

He explained that his party recognised that the decision to increase VAT was not taken lightly as it impacted all South Africans.

However, he said given the dire state of public finances, revenue collection shortfalls and the need to maintain critical social programmes, the party believed this measure was a responsible step forwards economic stability.

“…the alternative would have been further borrowing. This, however, is unsustainable in the long term as the debt services cost are already at a staggering R425-billion. The IFP remains anti further borrowing,” he said.

Hlabisa said had government chosen to borrow more money instead of adjusting revenue resources, it would have placed an unsustainable debt burden on future generations.

He stressed that the IFP was anti VAT increases.

Further, the IFP welcomed the expansion of zero-rated VAT food items alongside the increase of social grants.

Hlabisa said National Treasury must explore complementary revenue generation strategies such as improving tax collection efficiency and reducing government expenditure on non-essential items.

More broadly, the IFP believes the GNU must robustly focus on job creation, economic growth and investment.

Meanwhile, Hlabisa believes that illegal immigration is a heavy financial strain on the country and that it takes away from the resources meant for poor and vulnerable South Africans.