Cut BEE, Cut VAT: IRR targets provinces in value-for-money drive

The Institute of Race Relations (IRR) is intensifying its promotion of value for money in public procurement through slashing BEE premiums by engaging the Finance MECs of Gauteng, North West, Northern Cape, KwaZulu-Natal, and Limpopo.

In letters sent today, the IRR’s Strategic Engagements Manager, Makone Maja, urges these MECs to make value-for-money procurement a central pillar of their 2026 provincial budgets.

The letters are the latest phase of a broader national campaign to build political support for the IRR’s Value For Money Bill, which began last month with appeals to the Presidency and various Members of Parliament. The Bill is a draft law designed to give full effect to section 217 of the Constitution by making value for money the decisive standard in public procurement.

Over the coming weeks, the IRR will extend this campaign to the remaining provinces – the Western Cape, Eastern Cape, Free State, and Mpumalanga – while also engaging directly with provincial legislatures across the country.

At the centre of the campaign is the IRR’s proposal to eliminate BEE procurement premiums – the mark-ups paid by government for the same goods and services. These premiums are estimated to cost taxpayers more than R100 billion per year. Ending them would generate enough savings to reduce VAT from 15% to 11.5% without cutting a single rand from frontline service delivery.

“South Africans are currently paying a hidden BEE tax of between R100 and R150 billion per year. Instead of maximising procurement spending to achieve bang for buck, the government currently overtaxes and under delivers when it comes to delivery-related procurement. That is the opposite of value for money,” says Hermann Pretorius, IRR Head of Strategic Communications. “The Value For Money Bill offers a simple and concrete constitutional solution: stop overpaying, save billions, and deliver better services.”

The Bill replaces points-based procurement systems that allow price premiums with a transparent framework in which contracts are awarded based on life-cycle cost, quality, reliability, and integrity, ensuring that public funds achieve the greatest possible benefit.

According to the IRR, building support for the Value For Money Bill across Parliament and all nine provincial legislatures is essential to restoring fiscal discipline and unlocking economic relief for South Africans.

Adds Pretorius: “The goal of this campaign is to build a national majority for value for money in government spending.”

The IRR will continue engaging policymakers, legislatures, and the public as it expands the campaign nationwide.

Sign the petition in support of the Value For Money Bill here: https://irr.org.za/whatsacanbe/value-for-money

Media contact: Hermann Pretorius IRR Head of Strategic Communications Tel: 079 875 4290 Email: hermann@irr.org.za

Media enquiries: Michael Morris Tel: 066 302 1968 Email: michael@irr.org.za