The South African Federation of Trade Unions (SAFTU) succeeded in rolling back the proposed 15.5% 2025 VAT increase by the South African government. The Ministry of Finance canceled the May 1 increase. “This decision is not a gesture of goodwill by the ruling elite. It is the direct result of the collective action, sacrifice, and determination of workers and the poor—particularly those belonging to SAFTU and COSATU, the unemployed, informal traders, public sector workers, journalists, students, faith communities, and NGOs—who have protested austerity and the regressive tax proposals” said SAFTU General Secretary Zwelinzima Vavi. 

On April 2, 2025, South Africans were hit with a budget that puts the working class and ordinary citizens under the bus. The situation was worsened by the fact that:

• Real per capita public spending has declined by 18.1% since 2020. 

• 200,000 public service posts remain unfilled. 

• R96 billion in real cuts is affecting basic education, health, and social development.

• Wages are frozen or capped below inflation, and the child support grant is below the food poverty line. 

undeniably an austerity budget. Instead of taxing wealth and ending corporate tax dodging, Treasury is raising VAT and cutting spending on basic services.

The 2025 national budget is “undeniably an austerity budget. Instead of taxing wealth and ending corporate tax dodging, Treasury is raising VAT and cutting spending on basic services.”—Vavi. He further highlighted that under the false banner of “fiscal consolidation,” the government continues to sacrifice public services, freeze wages, and transfer the burden of economic recovery to the working class and poor. 

The government chooses investors over people, throwing billions into debt repayments—feeding investors while starving the people. Vavi warned that it is about “political power and class priorities”.

A few days after announcing the VAT increase, PSI and AIDC convened a High-Level Trade Union Workshop on Fighting Austerity in Cape Town on April 14 & 15. They explored strategies to combat the austerity budget and defend workers. As it is, “Our money is going into a black hole—not the state, but the stock market.”—Vavi warns during the workshop. 

Unions rejected the VAT hike which would have led to a further increase in the number of the existing 17,832 schools that have no libraries, further eroding the existing 9.5% health sector inflation among others. 

We put forward the following bold alternatives across to them: 

• Impose 1% tax on net wealth over R3.6m. 

• Reverse stealth tax cuts: R198 billion lost.

• Raise corporate tax from 27% to 30%. 

• Fully fund SARS: R800 billion in recoverable taxes.

• Impose windfall taxes and luxury goods.

After sustained pressure by the unions, the proposed VAT hike to 15.5% was canceled on April 24.  Vavi remarked that “It is a victory earned in the streets—by thousands of workers who marched, picketed, and voiced their rejection of a tax system designed to punish the poor while sparing the rich”. But also reminded everyone that “This victory over VAT must be a stepping stone to bigger victories”

We continue to reject theft of public wealth, we refuse to accept budget cuts that harm jobs, deepen inequality and destroy public services.