The African National Congress Youth League (ANCYL) has expressed disappointment over Finance Minister Enoch Godongwana’s proposed decision to increase VAT by 1%, warning it would harm the poor, working-class, jobless youth and low-income households.

ANCYL secretary general Mntuwoxolo Ngudle said the proposed VAT increase, announced by Godongwana on Wednesday, will “disproportionately” affect vulnerable groups despite the extension of VAT zero-rated items.

“While the extension of zero-rated items is acknowledged, it does not go far enough to shield vulnerable communities from the rising cost of living,” Ngudle said.

Godongwana proposed that the country’s VAT rate will increase by 0.5 percentage points both in 2025 and 2026, which will ultimately bring the VAT rate to 16% in 2026 and 2027.

He reiterated the youth leagues' call for progressive taxation that places the burden on high-income earners and profit-rich, emphasising the need for them to contribute their fair share to the country's development.

“Tax justice is not a luxury but a necessity for building an inclusive and equitable economy,” he said.

Ngudle welcomed the R3.5 billion allocation to South African Revenue Service (SARS) this year, with an additional R4 billion over the medium term to strengthen its capacity.

“A capable South African Revenue Service (SARS) is essential in ensuring the fair collection of revenue to fund a developmental state that serves the youth and the working class,” Ngudle said.

The youth league also supported the increased tax compliance and the expansion of progressive revenue sources, including export taxes, wealth taxes, and stronger enforcement against illicit financial flows.

The ANCYL also praised the allocations aimed at increasing public sector recruitment, including R28.9 billion to retain over 9,300 healthcare workers and employ 800 post-community service doctors, as well as R19.1 billion to retain 11,000 teachers.

“These interventions are commendable and align with our demand to absorb young professionals into essential services,” Ngundle said.

However, Ngudle slammed the lack of a dedicated Youth Employment Drive tied to industrialisation.

“There is still no clear national programme that transitions youth into long-term, socially useful employment, particularly in the infrastructure, green, mining and manufacturing sectors,” he said.

Ngudle said the ANCYL calls for the urgent establishment of Job Guarantee Programmes for young people, linked to service delivery and industrial transformation.

The youth league acknowledged the R10 billion increase in Early Childhood Development (ECD) subsidies and the provision of funds to support access to education, but expressed disappointment at the lack of expanding the National Financial Student Aid Scheme (NSFAS), especially for the "missing middle" students.”

“Furthermore, while there is implicit support for TVET and skills infrastructure through Operation Vulindlela, we need explicit budgetary commitments toward artisan training and capacitating TVET colleges,” he said.

Ngudle said the budget does not do enough to stimulate the revitalisation of townships and rural economies.

“There is no direct funding stream or procurement initiative targeting youth-owned enterprises, nor is there a fund for young entrepreneurs and SMMEs,” he said.

Ngudle reiterates the youth league’s call for the establishment of a Youth Economic Development Fund, backed by public procurement targets and access to grants for youth-owned enterprises.

simon.majadibodu@iol.co.za

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