IRR reaffirms call for scrapping VAT-boosting BEE premiums in letters to DA, FF+, ACDP

The Institute of Race Relations (IRR) has sent letters to the leaders of the Democratic Alliance (DA), Freedom Front Plus (FF+), and the African Christian Democratic Party (ACDP), reiterating its demand for an end to “pro-poverty” BEE premiums in public procurement.

Scrapping these “BEE tax” costs, the IRR argues, is a practical alternative to resorting to “tax-and-spend economics” in the form of a contentious VAT hike, which has the harshest effects on the most vulnerable South Africans.

Says Hermann Pretorius, IRR Head of Strategic Communications: “It is the poorest people in our country who need value-for-money service delivery the most and who will suffer disproportionately from an unnecessary and cruel VAT hike.”

Building on last week’s engagement with the Economic Freedom Fighters (EFF) and the uMkhonto weSizwe Party (MK), the IRR’s letters point out that abolishing these costly BEE premiums could prevent raising VAT and even allow for a reduction of the tax rate to 11,5%.

Says Pretorius: “The ‘big-government bloat’ tied to BEE premiums means higher public expenditure and less value-for-money in procurement. If we are serious about economic growth, we need to stop subsidising failure and start fostering an environment that benefits everyone, rather than letting ‘bureaucracy over merit’ drive up costs.”

In the coming weeks, the IRR will write to all parliamentary parties – including those that voted to raise VAT (such as the ANC, ActionSA, BOSA, and the PA) – to emphasize that the national debate about the budget cannot ignore “anti-enterprise policies” like BEE premiums.

“Sluggish economic growth that fuels poverty cannot be truly defeated if we cling to pro-poverty state-run inefficiency,” adds Pretorius. “We call on all parties to focus the national debate about government spending on pro-growth policies, tax fairness, and value-for-money service delivery.”

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