COPE Rejects VAT Hike, Calls for Wealth Tax on the Rich

The Congress of the People (COPE) has strongly opposed the proposed VAT increase in the 2025 Budget, warning that it will worsen inequality, deepen the cost-of-living crisis, and disproportionately harm the poor. In a statement issued today, COPE called for alternative tax solutions that would protect low-income households while ensuring the government meets its revenue targets.

The Standing Committee on Finance’s latest report (April 1, 2025) supports COPE’s stance, highlighting that raising VAT from 15% to 16% over the next two years could erode household incomes and fail to generate the expected R28 billion in additional revenue. Critics argue that VAT—already a regressive tax—places a heavier burden on lower-income families, while wealthier citizens remain largely unaffected.

COPE has put forward five key proposals as an alternative to the VAT hike:

1. No VAT Increase – Keep the rate at 15% to safeguard struggling households.

2. Wealth Tax – Introduce taxes on the wealthy and luxury assets instead of burdening the poor.

3. Strengthen SARS – Focus on recovering a portion of the R800 billion tax gap through enhanced enforcement.

4. Cut Wasteful Spending – Redirect funds from unnecessary government expenditure to essential services.

5. Fight Corruption – Address financial mismanagement and fraud, which drain resources meant for public benefit.

COPE’s opposition aligns with economic experts and stakeholders who argue that VAT is becoming a less effective revenue tool, as evidenced by its declining elasticity (0.49). With GDP growth stagnating at 0.6% in 2024 and unemployment at a staggering 31.9%, COPE warns that an increase in VAT would further cripple an already struggling economy.

The party is calling on Parliament to reject the VAT increase and adopt a budget that prioritizes social justice over austerity. As the debate intensifies, COPE has vowed to fight for a fairer and more equitable South Africa.