EFF president Julius Malema. The party has formulated a fiscal framework and revenue proposal document, submitted to the treasury. (X)
The Economic Freedom Fighters (EFF) used talks with the ANC last week to double down on its push for a radical shift in fiscal policy, again rejecting a proposed VAT hike and instead insisting the ANC table a R512.8 billion stimulus plan aimed at reversing austerity and accelerating inclusive economic growth.
The Red Berets met the ANC last Friday after being invited by the party to discuss the budget impasse and explore possible alignment on the fiscal framework passed by parliament earlier this month.
The EFF used the meeting to reiterate its opposition to the treasury’s plan and instead presented its own counter-budget, which outlines a radically different path, centred on wealth taxes, public investment and structural reforms.
In an interview with the Mail & Guardian, EFF spokesperson Sinawo Thambo said the party outright rejected proposals to vote in favour of a 0.5% VAT increase, due to take effect on 1 May.
“This VAT hike is a regressive tax that punishes the poor to protect elite interests,” said Thambo. “There are better ways to raise revenue than burdening the working class.”
Instead, the EFF is calling for an increase in corporate income tax — from 27% to 28.5% in 2025-26 and 30.5% in 2026-27.
The reversal of what the party calls the “ANC-era corporate tax cuts” of 2022 is expected to generate R44.7 billion in additional revenue, Thambo said.
The party proposes a three-year economic stimulus package, financed through progressive taxation and reallocated state resources.
It includes funding for job creation, infrastructure development, education and industrialisation, which the party argues would boost GDP growth to 4.5% between now and 2027 — more than double the treasury’s projection of 1.8%.
The party is calling for the introduction of new taxes on wealth, landholdings and inherited assets. This includes a once-off “apartheid tax” on pre-1994 trusts, used to shield white generational wealth.
“The tax would apply a 2% levy on trust assets between R20 million and R50 million; 4% on trusts up to R100 million and 6% on those above R100 million. Estimated revenue ranges from R30 billion to R50 billion,” Thambo said.
In addition, the EFF wants an annual wealth tax of 0.25% on luxury and under-utilised property assets valued at more than R1 trillion, with a 0.5% levy on individual property assets worth over R50 million.
The party projects an annual yield of R7.5 billion from this measure.
Thambo said the EFF is also advocating for a 4.5% inflationary adjustment to personal income tax brackets to protect workers from “bracket creep”, where inflation pushes them into higher tax bands without a real increase in income.
The EFF’s revenue framework is complemented by a proposal to strengthen the South African Revenue Service (Sars), with an injection of R4 billion in 2025-26 and R500 million in 2026-27.
Thambo said the investment is essential to unlock the R700 billion to R800 billion “tax gap”, including R422 billion in undisputed debt.
A recent Sars pilot project reportedly collected R25.2 billion using just R318 million in additional staff and resources.
The party’s 2025 fiscal framework and revenue proposal document, submitted to the treasury, includes allocations such as:
• R84.5 billion for frontline employment (such as teachers, nurses, police);
• R58 billion in reindustrialisation incentives;
• R64 billion to modernise rail and freight infrastructure;
• R41 billion to localise energy production (solar, batteries);
• R40 billion for state-led affordable housing;
• R33 billion for township and rural industrial parks; and
• More than R70 billion for education infrastructure, youth employment, clinics and sanitation.
To fund this package, the EFF proposes:
• R120 billion from UIF and Compensation Fund surpluses;
• R110 billion from prescribed investments by the Public Investment Corporation;
• R152.8 billion in borrowing — less than the Covid-19 borrowing levels — and
• R130 billion from tax reforms.
According to the document, this would create or sustain at least 2.1 million jobs over three years and increase gross tax revenue to R2.5 trillion by 2027-28 — R190 billion more than the treasury forecasts.
“Deficits, when directed towards productive public investment, are not a crisis. They are a catalyst,” reads the party’s proposal.
It also situates its fiscal policy in a shifting global context, where austerity is falling out of favour.
Thambo cited rising global protectionism, the decline of the US’s African Growth and Opportunity Act and the growth of Brics and the African Continental Free Trade Area as reasons South Africa should pivot towards sovereign industrialisation and demand-led growth.
“We can no longer depend on externally driven export growth,” said Thambo.
The EFF is deeply critical of the political process that led to the budget impasse.
Thambo said the ANC’s decision to engage the EFF after the fiscal framework had already been adopted by parliament undermined any genuine attempt at consensus-building.
“It was quite clear to us the engagement was not genuine. We were approached at the last minute, when there’s a crisis or a need for votes.”
He added that there was some broad agreement from the ANC on these proposals as the party didn’t outright reject them but raised concerns that these ideas cannot be incorporated into the current fiscal framework, as the budget process had already passed key stages.
“That’s precisely why we say the engagement has been somewhat insincere — had these discussions happened earlier, these proposals could have been factored into the budget planning process,” Thambo said.
He added that the ANC’s inconsistency and reliance on other GNU partners, such as the Democratic Alliance (DA) and Freedom Front Plus (FF+), further eroded trust.
“You can’t be in government, reject the budget, and still want to preside over financial legislation,” he said.
He criticised ANC secretary general Fikile Mbalula’s recent claim that the EFF had abandoned its pro-poor principles by voting with the DA against the fiscal framework.
Thambo described the accusation as hypocritical, arguing that it is the ANC that has embraced austerity and failed to lead an inclusive economic transition.
“If [EFF leader Julius] Malema and his party had the kind of majority the ANC enjoys, do you really think they’d be working with the DA?” Mbalula asked last week.
In response, Thambo said the EFF had long drawn a line in the sand — it would not participate in any government of national unity that included the DA or FF+: “If the DA is not going to be part of the GNU, we’re willing to work with the ANC. But if they are, we won’t participate.”
Still, the party has left the door open to a looser form of cooperation through a “supply-and-confidence” arrangement, where it supports key legislation without entering into a formal coalition.
“We proposed this to them before and after the elections.
“We don’t have to be in government to ensure certain legislation passes,” Thambo said.
While there was some agreement on issues such as corporate tax evasion and illicit financial flows, Thambo accused the ANC of failing to confront its GNU partners.
“They’re being extorted,” he said, referencing the DA’s legal challenges to government decisions and statements by DA ministers that they would not implement certain laws.
“If the ANC wants to be governed by capital and racist organisations, that’s their decision.
“We are not desperate to govern. But if the opportunity arises without those who oppose economic transformation, we will be ready.”
The EFF is calling on parliament, the Financial and Fiscal Commission and the Parliamentary Budget Office to begin drafting a new national fiscal framework that centres inclusive growth, employment and sovereignty.
“This is not just an economic intervention, it is a political commitment to a new developmental state,” Thambo said.