South Africa's ANC Seeks to Shield Poor From Sales Tax Increase

(Bloomberg) -- South Africa’s ruling African National Congress said the government must consider additional measures to protect the poor from the effect of higher sales tax, possibly by increasing the number of exempt items.

Finance Minister Malusi Gigaba announced plans to raise the rate of value-added tax to 15 percent from 14 percent in the Feb. 21 budget, a decision criticized by the ANC’s labor union allies and civil rights groups. The National Treasury said the move was seen as the best option to plug a hole in the government’s finances and ward off further credit rating downgrades.

“On VAT, we’re aware that a lot of stakeholders, trade unions, are raising issues, particularly about food” and concerns that the poor will be adversely affected by rising prices, Ace Magashule, the ANC’s secretary-general told reporters in Pretoria, the capital, following a one-day meeting of the national executive committee, its top decision-making structure.

Potential changes to President Cyril Ramaphosa’s cabinet weren’t discussed at the meeting, but the matter may be considered by the party’s top leaders on Monday, Magashule said. Ramaphosa was elected president on Feb. 15, a day after Jacob Zuma resigned.

Cabinet Changes

‘The issue of cabinet is always a prerogative of the president in or after consultation with the national officials,” Magashule said. “We are going to move with speed to ensure that the issue of cabinet” is addressed, he said.

The ANC named its deputy leader David Mabuza as the head of its deployment committee. Senzo Mchunu, the former premier of the eastern KwaZulu-Natal province, and Zizi Kodwa, its former spokesman, will take up positions at its head office in Johannesburg, which could potentially rule the two out of the running for cabinet posts.

Enoch Godongwana was retained as the party’s head of economic transformation, Environmental Affairs Minister Edna Molewa was named as head of its national disciplinary committee and Police Minister Fikile Mbalula will head its national elections committee.

Ramaphosa has promised to revive the struggling economy, create jobs and tackle corruption. His appointment more than a year before national elections could help the ANC win back voters alienated by a succession of scandals, policy missteps and inappropriate appointments during Zuma’s nine-year tenure.

To contact the reporter on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net.

To contact the editors responsible for this story: Karl Maier at kmaier2@bloomberg.net, Mike Cohen, Gordon Bell

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