Shield poor communities from policies that deepen poverty, IRR urges EFF, MK*

The Institute of Race Relations (IRR) has urged the Economic Freedom Fighters (EFF) and uMkhonto we Sizwe (MK) to go beyond opposing the Value-Added Tax (VAT) increase by actively protecting poor communities from what amounts to a “BEE tax” that stifles innovation and punishes success.

Says IRR Strategic Engagements Manager Makone Maja: “The IRR has reached out to commend both parties for defending the livelihoods of South African taxpayers, particularly the poor, whose disposable incomes will be eroded by higher VAT. We also encourage them to recognise how BEE, often simply abused as a wealth-redistributionist scheme, disincentivises productivity and perpetuates a government-knows-best mentality.”

Parliament voted to increase VAT when it adopted the Fiscal Framework, while the EFF and MK voted against it. Their combined opposition constitutes the bulk of resistance to the hike, with both parties condemning its effect on working- and middle-class South Africans, especially those living in poverty. Acknowledging this shared concern, the IRR has presented research on an alternative approach: slashing BEE requirements to shield marginalised communities from further economic harm.

“BEE forces impoverished communities to sacrifice essential development and service delivery,” says Maja. “Instead of pumping money into big-government bloat and bureaucracy over merit, government could redirect those funds to invest in infrastructure and job creation for the poor.”

The EFF and MK have long criticised BEE for promoting crony socialism, nepotism, and preferential treatment at the expense of true meritocracy. The IRR’s findings support the view that BEE, far from empowering the marginalised, often degenerates into nourishing a BEE mafia or enabling a "BEE shakedown" that leaves impoverished communities mired in welfare poverty and chokes small businesses with red tape.

Maja notes that the IRR is finalising a new policy framework aimed at truly uplifting those trapped in poverty. “Rejecting the VAT increase is a principled stand, but we must also confront anti-enterprise policies. Only by tackling BEE’s failures and its pro-poverty consequences can we ensure that service delivery, job creation, and genuine development reach those who need it most.”

Maja concludes: “Resisting anti-innovation and government meddling is as vital as keeping taxes in check. By working together, we can protect our most vulnerable communities, drive real economic growth, and break free from one-size-fits-all economics that hinders rather than helps.”

Over the coming weeks, the IRR will seek similar engagements with the leaders of other political parties across Parliament, on all sides of the VAT debate, to ensure a full discussion of all the alternatives for improving South Africa’s fiscal health.

*This revised heading corrects any misapprehension that may have arisen from the earlier version.

Media contact: Makone Maja, IRR Strategic Engagements Manager Tel: 079 418 6676 Email: makone@irr.org.za

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