Introduction
On the 12th of March 2025, the Minister of Finance, Mr. Enoch Godongwana finally presented the 2025/26 budget speech after a failed first attempt at presenting it. The first attempt failed because the Government of 'National Unity' (GNU) failed to agree on a proposed two percentage point increase of the Value Added Tax (VAT). This created an uproar across the political spectrum and sparked a nationwide debate about the role of National Treasury, and the fiscal & monetary policy of the Republic of South Africa. The budget speech was finally presented, and it was not a major deviation from the original speech. The ANC led coalition back peddled on the figure of two percentage points but continued to motion for a VAT increase of zero-point five percentage points in this coming financial year, and another zero-point five percentage points in the financial year of 2026/27. This totals to an increase of one percentage point over the course of two financial years. While ANC leaders have touted this as a pro-poor budget because the Minister proposed an increase of the core social grants (old-age grant, child-rearing grant, and disability grant), healthcare, education, and defense, this lie cannot be sufficiently defended or rationally explained due to the VAT increase of zero-point five percentage points. The purpose of this article is to analyse the budget through the lens of the most potent tool of analysis, dialectical materialism, in order for us to challenge the neoliberal framework underpinning it.
Understanding Dialectial Materialism
Dialectical Materialism remains an important philosophical and methodological framework of analysing society, and its developments thereof. It was pioneered by Karl Marx and Friedrich Engels, and it seeks to understand the world and society through an outlook that emphasizes the interconnectedness, perpetual change, and inherent contradictions that we find in all living matter, more particularly the living organism that is society. Dialectical materialism is steeped in understanding the material conditions, and this analyitical framework proposes a dynamic view of what reality is, and is a contrast to the more rigid, static, linear, and idealist concepts of analysis that most often than not prioritise abstract ideas or rather, unchanging essences. At the core of dialectical materialism is the belief that is rooted in the scientific understanding that the material world is accessible through our senses and ultimately possesses an objective reality that is independent of consciousness. In sum, the world is, was, and has always been independent of the consciousness of humanity. In fact, the consciousness of humanity is formed through its interactions with the material world. What many Dialectical Materialists fear to state unequivocally is that mental or spiritual processes exist, however, they are products and reflections of these material conditions that exist in the material world. In sum, primarily, the material conditions influence mental and spiritual processes, similar to the sociological concept of a base structure and superstructure pioneered by Karl Marx. Dialectical Materialism posits that matter constitutes the fundamental substance of reality and that thought, and consciousness emerge as reflections of this material being.
At the centre of dialectical materialism is the dialectical method which was initially taught in Europe by Socrates. Socrates had learnt this method while studying in Kemet (modern day Egypt). In Kemet, this method was known as the conversational method, which was largely determinist. Centuries later, Hegel developed this method further, and a few years later, two students of his ideas, Karl Marx & Friedrich Engels developed the Hegelian dialectical further and fused it with the materialist conception of history to create a new philosophical methodology of analysis called dialectical materialism. The dialectical method is a method of inquiry which is used to initially highlight the contradictions, and then ultimately synthesise them or negate the other with another. The dialectical method views reality as a realm of constant evolution which is driven by internal contradictions and the dynamic interaction and interplay of opposing forces. The dialectical method views contradictions as a reality which are inherent in society, and ultimately advance development. In sum, the dialectic acknowledges that contradiction exist, are fundamental to the development of society, and the constant clash of this opposites leads to development which can either be negative or positive depending on the dominant force. These contradictions are understood as inherent within material phenomena and capable of resolution through dialectical analysis, ultimately leading to a synthesis that resolves the contradiction while retaining its essential elements. The dialectic has three fundamental laws/principles, and they are:
1. The law of the transformation of quantity into quality, vis-a-vis.
2. The law of the interpenetration of opposites.
3. The law of negation of the negation.
According to Wm. F. Warde,
"The first law signifies that “in nature, in a manner exactly fixed for each individual case, qualitative changes can only occur by the quantitative addition or subtraction of matter or motion (so-called energy).” In the second chapter Engels indicates precisely how this law operates by numerous examples taken from the exact sciences of mechanics, physics, and chemistry where accurately measurable and traceable quantitative variations are directly linked with the production of qualitative differences. In physics, it has since been ascertained, there exists a continuous series of rays from radio to cosmic rays in which quantitative variations in wavelength manifest themselves in determinable qualitative differences. This same law is equally clearly observable in chemistry where the properties of bodies are altered in concordance with their changed quantitative composition. Engels cites the allotropic forms of elements, the nitrogen oxide compounds, the homologous series of carbon compounds, and the periodic arrangement of the elements according to their atomic weights; modern chemists could add many more examples.
At the centre of dialectical materialism is the dialectical method which was initially taught in Europe by Socrates. Socrates had learnt this method while studying in Kemet (modern day Egypt). In Kemet, this method was known as the conversational method, which was largely determinist. Centuries later, Hegel developed this method further, and a few years later, two students of his ideas, Karl Marx & Friedrich Engels developed the Hegelian dialectical further and fused it with the materialist conception of history to create a new philosophical methodology of analysis called dialectical materialism. The dialectical method is a method of inquiry which is used to initially highlight the contradictions, and then ultimately synthesise them or negate the other with another. The dialectical method views reality as a realm of constant evolution which is driven by internal contradictions and the dynamic interaction and interplay of opposing forces. The dialectical method views contradictions as a reality which are inherent in society, and ultimately advance development. In sum, the dialectic acknowledges that contradiction exist, are fundamental to the development of society, and the constant clash of this opposites leads to development which can either be negative or positive depending on the dominant force. These contradictions are understood as inherent within material phenomena and capable of resolution through dialectical analysis, ultimately leading to a synthesis that resolves the contradiction while retaining its essential elements. The dialectic has three fundamental laws/principles, and they are:
1. The law of the transformation of quantity into quality, vis-a-vis.
2. The law of the interpenetration of opposites.
3. The law of negation of the negation.
According to Wm. F. Warde,
"The first law signifies that “in nature, in a manner exactly fixed for each individual case, qualitative changes can only occur by the quantitative addition or subtraction of matter or motion (so-called energy).” In the second chapter Engels indicates precisely how this law operates by numerous examples taken from the exact sciences of mechanics, physics, and chemistry where accurately measurable and traceable quantitative variations are directly linked with the production of qualitative differences. In physics, it has since been ascertained, there exists a continuous series of rays from radio to cosmic rays in which quantitative variations in wavelength manifest themselves in determinable qualitative differences. This same law is equally clearly observable in chemistry where the properties of bodies are altered in concordance with their changed quantitative composition. Engels cites the allotropic forms of elements, the nitrogen oxide compounds, the homologous series of carbon compounds, and the periodic arrangement of the elements according to their atomic weights; modern chemists could add many more examples.
The second law of the dialectic asserts that everything has a self-contradictory character, containing within itself its own opposite. The bi-polar essence of all things manifests itself in change, which is a process of alteration, or transformation of something from its original state through a series of intermediate variations into its opposite. Engels brings forward this law of the interpenetration of opposites in the third chapter where he investigates the most important of scientific problems, the basic forms of motion."
According to A. Aizenberg,
"The law of the negation of the negation is a concrete form of the law of the unity of opposites, that is, the law of the struggle of opposites and the resolution of their contradiction. Engels also saw in this the essence of the law of the negation of the negation. He wrote: “The true, natural, historical, and dialectical negation is (formally) the moving source of all development--the division into opposites, their struggle and resolution, and what is more, on the basis of experience gained, the original point is achieved again (partly in history, fully in thought), but at a higher stage.” Thus, the essence of the law of the negation of the negation, the essence of thesis, antithesis, and synthesis in the division of unity, in the struggle of opposites and in the resolution of this contradiction, that is, in the origin of new developmental tendencies."
However, this article is not meant to explain what dialectical materialism is but give the reader an understanding of this methodology that Marxists use to understand all material development in society, be it in economics, politics, natural sciences, physical sciences, social sciences, and in the general context of society. This methodology is contrasted by neoliberalism which can be defined as a policy model and political philosophy that underlines free markets and sees the free market as the ideal and ultimate method of resolving the contradictions of society. It pushes for limited state intervention in the economy, promotes deregulation, promotes privatisation of SOEs, and fiscal austerity, the current policy of our government, and ultimately the reduction of barriers to international trade and capital flows. This ideology rests on the belief that human well-being can be best advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade. This focus on individual freedom and market-driven solutions stands in contrast to the collectivist and state-interventionist tendencies often associated with Marxist thought. Dialectics and history teach us that neoliberalism evolves from classic liberalism which failed in 1929, leading to the worst economic crisis in the Western world known as the Great Depression. It gained momentum in the 70s and 80s after the failures of Keynesian economics which advocated for state intervention. The rise of neoliberalism is extremely key in understanding its significant influence through Bretton Woods institutions like the World Bank (WB) and the International Monetary Fund (IMF). Institutions like the World Economic Forum (WEF) provide oversight to neoliberal economies to ensure that they are in sync with the global order of neoliberalism.
The interaction of these contrary forces in recent history within the geopolitical borders of South Africa has led us to this point we find ourselves in, an impasse! This impasse is caused by divisions within the neoliberal camp which has consolidated into a GNU, while the dialectical materialist camp, which stands in contrast has actively disagreed, and seen this as a possible maneuver to renegotiate the coalition set-up and pave the way for the entry of the EFF at the expense of the exit of the DA and FF+ in the main. This is also part of a package to ensure that the most dominant fraction of the neoliberal camp (ANC) does not increase VAT but repositions its budgetary priorities. It is important for us to understand this dialectical reality that could either lead to a further consolidation of the neoliberal agenda, which will be typified by a rapid rate of privatisation, deregulation, and ultimately the balkanisation of South Africa into three/four republics depending on whether the Zulu kingdom has the appetite for secession or not. It could also lead to the disintegration of the neoliberal agenda leading us to a path of greater state intervention, free education, free healthcare, expropriation of land without compensation, thus, paving the way for a rapid redistribution of land, and nationalisation of the South African Reserve Bank (SARB) which will be coupled with the amendment of its mandate to include a focus on economic growth instead of solely focusing on containing inflation and interest rates. However, the consequences of the second scenario could be increased hostility from the West (United States of America in particular) and pave the way for full blown sanctions. What is clear to all is that South Africa is in a crossroads between more neoliberalism which will translate to more economic failure and inequality or a shift to a heterodox and socialist oriented economic framework which could lead to the rapid defeat of economic stagnation and inequality.
According to A. Aizenberg,
"The law of the negation of the negation is a concrete form of the law of the unity of opposites, that is, the law of the struggle of opposites and the resolution of their contradiction. Engels also saw in this the essence of the law of the negation of the negation. He wrote: “The true, natural, historical, and dialectical negation is (formally) the moving source of all development--the division into opposites, their struggle and resolution, and what is more, on the basis of experience gained, the original point is achieved again (partly in history, fully in thought), but at a higher stage.” Thus, the essence of the law of the negation of the negation, the essence of thesis, antithesis, and synthesis in the division of unity, in the struggle of opposites and in the resolution of this contradiction, that is, in the origin of new developmental tendencies."
However, this article is not meant to explain what dialectical materialism is but give the reader an understanding of this methodology that Marxists use to understand all material development in society, be it in economics, politics, natural sciences, physical sciences, social sciences, and in the general context of society. This methodology is contrasted by neoliberalism which can be defined as a policy model and political philosophy that underlines free markets and sees the free market as the ideal and ultimate method of resolving the contradictions of society. It pushes for limited state intervention in the economy, promotes deregulation, promotes privatisation of SOEs, and fiscal austerity, the current policy of our government, and ultimately the reduction of barriers to international trade and capital flows. This ideology rests on the belief that human well-being can be best advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade. This focus on individual freedom and market-driven solutions stands in contrast to the collectivist and state-interventionist tendencies often associated with Marxist thought. Dialectics and history teach us that neoliberalism evolves from classic liberalism which failed in 1929, leading to the worst economic crisis in the Western world known as the Great Depression. It gained momentum in the 70s and 80s after the failures of Keynesian economics which advocated for state intervention. The rise of neoliberalism is extremely key in understanding its significant influence through Bretton Woods institutions like the World Bank (WB) and the International Monetary Fund (IMF). Institutions like the World Economic Forum (WEF) provide oversight to neoliberal economies to ensure that they are in sync with the global order of neoliberalism.
The interaction of these contrary forces in recent history within the geopolitical borders of South Africa has led us to this point we find ourselves in, an impasse! This impasse is caused by divisions within the neoliberal camp which has consolidated into a GNU, while the dialectical materialist camp, which stands in contrast has actively disagreed, and seen this as a possible maneuver to renegotiate the coalition set-up and pave the way for the entry of the EFF at the expense of the exit of the DA and FF+ in the main. This is also part of a package to ensure that the most dominant fraction of the neoliberal camp (ANC) does not increase VAT but repositions its budgetary priorities. It is important for us to understand this dialectical reality that could either lead to a further consolidation of the neoliberal agenda, which will be typified by a rapid rate of privatisation, deregulation, and ultimately the balkanisation of South Africa into three/four republics depending on whether the Zulu kingdom has the appetite for secession or not. It could also lead to the disintegration of the neoliberal agenda leading us to a path of greater state intervention, free education, free healthcare, expropriation of land without compensation, thus, paving the way for a rapid redistribution of land, and nationalisation of the South African Reserve Bank (SARB) which will be coupled with the amendment of its mandate to include a focus on economic growth instead of solely focusing on containing inflation and interest rates. However, the consequences of the second scenario could be increased hostility from the West (United States of America in particular) and pave the way for full blown sanctions. What is clear to all is that South Africa is in a crossroads between more neoliberalism which will translate to more economic failure and inequality or a shift to a heterodox and socialist oriented economic framework which could lead to the rapid defeat of economic stagnation and inequality.
Historical Context of Neoliberalism
On the 27th of November 2024, this blog published an excerpt from an upcoming pamphlet titled, 'On Neoliberalism & United Front Politics: Towards a progressive United Front Against Neoliberalism' which provided a historical context and nature of neoliberalism. I will simply quote the key parts of this already published document so that I do not spend extensive time re-telling the history of neoliberalism. I wrote the following on the history of neoliberalism,
"It would be historically unmaterialistic for us not to delve into the historical context and the nature of neoliberalism without linking its origins to classic liberalism as espoused by Adam Smith which preached the 'gospel' of free markets, limited to no government intervention, and individual liberty which has become the hallmark of all advanced capitalist societies, more particularly USA. However, the Great Depression led to a collapse of the classic liberal understanding of how the economy works when the 'invisible hand' failed to intervene. The 'invisible hand' theory suggested that the capitalist economy had the mechanisms to self-correct its inherent contradictions without government intervention. The rise of Keynesian economics as propagated by renegade socialist and former Marxist; John Maynard Keynes, which sidelined classic liberalism by advocating for government intervention to correct the inherent contradictions of capitalism. Keynesian economics remained a dominant force until Post-World War II.
"It would be historically unmaterialistic for us not to delve into the historical context and the nature of neoliberalism without linking its origins to classic liberalism as espoused by Adam Smith which preached the 'gospel' of free markets, limited to no government intervention, and individual liberty which has become the hallmark of all advanced capitalist societies, more particularly USA. However, the Great Depression led to a collapse of the classic liberal understanding of how the economy works when the 'invisible hand' failed to intervene. The 'invisible hand' theory suggested that the capitalist economy had the mechanisms to self-correct its inherent contradictions without government intervention. The rise of Keynesian economics as propagated by renegade socialist and former Marxist; John Maynard Keynes, which sidelined classic liberalism by advocating for government intervention to correct the inherent contradictions of capitalism. Keynesian economics remained a dominant force until Post-World War II.
As a result, after World War II, neoliberalism began to take shape as an ideological response to the expansion of the government intervention, and some of the Keynesian welfare policies like unemployment grants, and alphabet agencies (government-owned job creating mechanisms and mega public infrastructure programmes to create employment) which had become dominant not just in USA but in the Western world as a whole due to government intervention, and the damage caused by World War II. Intellectual networks like Mont Pelerin Society were founded by the Austrian economist Friedrich Hayek, and many other like-minded economists in 1947, just two years after the conclusion of World War II. These networks were fundamental in resurrecting and redefining liberal economic principles to fit the post-World War II and post-Great Depression geopolitical reality. As a result, early neoliberal thought started gaining traction due to economists such as Milton Friedman using their proximity to institutions like the University of Chicago (this would eventually produce the phenomenon of the Chicago Boys in Chile during the Pinochet years), and influential publications which drove discourse. The founding of Bretton Woods institutions in the Bretton Woods conference like the International Monetary Fund (IMF) and the World Bank (WB) during this period saw them incorporate neoliberal principles more particularly in their lending practices through a method called Structural Adjustment Programmes (SAPs).
Even though in the early days Neoliberalism did not dominate mainstream politics immediately after World War II, found expression in the socio-economic experiment that was West Germany under the then Chancellor of West Germany, Ludwig Erhard who implemented a model called social market economy, which is vastly different from the social market economy model currently in place in Vietnam. However, Keynesianism dominated much of the Western economy during this period, and it was aided and abetted by the Truman doctrine which emphasised spending huge sums of money to rebuild Western Europe to prevent the spread of the Soviet Socialist interpretation of Joseph Stalin's administration. However, by the late 70s, the post-World War II economic boom fuelled by Keynesian economic measures of government intervention had begun to wane, and the West faced a phenomenon called stagflation (stagnation plus inflation). The Keynesian model was subsequently viewed as insufficient to address this particular challenge, thus creating an opening for Neoliberalism.
In 1979, UK Prime Minister Margeret Thatcher begun implementing privatisation (the ownership transfer of public enterprises and public services to private entities often justified as a measure to enhance efficiency and reduce public spending) of state-owned industries and entities, deregulation of markets (removing or relaxing government rules on businesses and markets to encourage competition and economic growth), and reduction of the power and influence of trade unions who had maintained the power of the workers and defended the rights of workers against the bosses. After achieving this, she moved towards fiscal consolidation and a monetarist approach to control inflation which marked a decisive break from Keynesianism. Meanwhile in 1980, Ronald Reagan who was recently elected as USA President pursued a similar programme in the USA and implemented tax cuts, deregulation, and reductions in spending on social programmes; the hallmarks of neoliberalism. A phenomenon known as Reaganomics emerged and it was typified by 'trickle-down economics' which prioritised reducing the tax burden on big business and the wealthy. This was believed to spur economic growth with the wealth gradually trickling down to the lowest earning workers, and even the unemployed masses. This is the same policy which has manifested itself in South Africa as Growth, Employment and Redistribution (1996 was the year of implementation) (GEAR), Accelerated and Shared Growth Initiative for South Africa (2005 was the year of implementation) (ASGISA), New Growth Path (2010 was the year of implementation) (NGP), and finally the National Development Plan (2012 was the year of implementation) (NDP).
The Bretton Woods institutions (IMF and World Bank) began promoting neoliberal policies globally as there was alignment with the biggest and most advanced capitalist economies in the Western world. Their hallmark policy of SAPs was imposed on many Developing nations like Tanzania which had taken loans from these institutions. The policy meant the adoption of austerity measures (enforcing reduced government spending, particularly on social programs, under the pretext of addressing budget deficits and encouraging fiscal discipline), privatise public assets and SOEs, and liberalise trade in exchange for financial aid from these institutions. In 1989, a set of ten economic policy prescriptions for developing countries which basically codified and systemised Neoliberalism as an all-encompassing ideology which would be hegemonic in the post-Cold war reality. This was known as the Washington Consensus Neoliberalism's dominance and hegemony was confirmed in 1991 with the dissolution of the first ever Socialist experiment, the Union of Soviet Socialist Republics (USSR), and further entrenched its dominance political discourse, emphasising individualism, competition, and vulgar consumerism.
This entrenchment has led to the rapid financialisaton (financialisaton refers to the process by which financial markets, financial motives, financial actors, and financial institutions become increasingly central to the operation of domestic and global economies. This phenomenon often leads to an increased focus on short-term profits, stock price maximization, and financial instruments over other forms of economic value creation, potentially resulting in risks related to economic stability and social inequality of the world economy), with South Africa, Chile, Uruguay, Paraguay, Namibia, Botswana, and Argentina experiencing that phenomenon sharply, given despite fact that these societies are Developing nations. This has led to widespread criticism while proponents of neoliberalism argue that Neoliberalism promotes global trade, innovation, and efficiency, especially with the rise of Silicon Valley as the centre of technological development. However, the reality is that Neoliberalism has rapidly increased wealth and income inequality, erosion of workers' rights in the workplace, and underfunding public services as is characteristic of the South African economy which has not only led to political instability within South Africa, but everywhere Neoliberalism has a hegemony. This has given rise to movements who are determined to shift away from Neoliberal orthodoxy either to the centre-left or the far left. This focus on market-driven growth has overlooked environmental degradation and sustainability contributing to climate change, with the Global South bearing the brunt of such. It is in this context that we must understand the Just-Energy transition as nothing but a mechanism to shift the blame to the Global South for environmental degradation caused by Neoliberalism which has its origins in the Western world or the Global North.
The exploitation of natural resources, commodification of public services, prioritisation of profit over ecological sustainability, lack of climate mitigation and genuine green energy alternatives which are removed from profiteering, weak public welfare systems, increasing wealth and income inequality, and aggressive tax avoidance through transfer pricing (It is a method of pricing goods and services transferred within a multinational or trans-national company in order to reduce tax burdens and maximise profits) & profit shifting (Base erosion & profit shifting (BEPS) relates to tax planning strategies that multinational enterprises use to exploit loopholes in tax rules to artificially shift profits to low or no-tax locations as a way to avoid paying tax) which lead to illicit financial outflows (Illicit financial flows, in economics, are a form of illegal capital flight that occurs when money is illegally earned, transferred, or spent. This money is intended to disappear from any record in the country of origin, and earnings on the stock of illicit financial flows outside a country generally do not return to the country of origin) have been contribution factors in intensifying the divide between rich and poor, with Neoliberalism enabling such. Developing nations (Global South) are subjected to austerity as part of structural adjustment programs, remain trapped in cycles of borrowing to service old debts. This limits their ability to invest in infrastructure, education, or healthcare. Furthermore, fiscal consolidation in the wake of COVID-19 has seen governments slash social spending to reduce deficits, despite rising unemployment and healthcare demands.
The labour market has been severely impacted due to Neoliberalism deregulating economies, thus fostering precarious employment (piece-jobs, temporary jobs, casual labour, and low paying internships) with fewer labour protections, and growing income insecurity. This phenomenon is called the Gig economy expansion because it renders normal work into something similar to a gig for an artist, musician or comedian. The weakening of Trade Unions due to bureaucratic degeneration within unions, and the subsequent undercutting of unionised workers by privatisation of public services, outsourcing, employing cheap labour which is largely dominated by African migrant workers, Southeast Asian shop owners & shopkeepers (merchant class) in the context of South Africa, and the implementation of anti-collective bargaining laws has led to the increase in unemployment resulting in under employment in many sectors, with government services having over 154 583 vacant positions as of September 2022, with a vacancy rate in national and provincial government departments of 11.7% according to the Public Service Commission of South Africa. Furthermore, workers bear the brunt of austerity through wage stagnation (Wage stagnation refers to a prolonged period where workers' real wages—adjusted for inflation—do not significantly increase, even as living costs rise. This phenomenon erodes purchasing power and contributes to income inequality), reduced pension benefits (two-pot pension system) and cuts to public services that once supplemented low income."
From this extensive quote, we can see that Neoliberalism did not emerge out of nowhere, but was a product of the failures of the Keynesian understanding of how the economy should function to ensure that society is prosperous, stable, and peaceful.
From this extensive quote, we can see that Neoliberalism did not emerge out of nowhere, but was a product of the failures of the Keynesian understanding of how the economy should function to ensure that society is prosperous, stable, and peaceful.
Analysis of the 2025 Budget Proposals
The 2025/26 budget proposals presented by the Minister of Finance, Monsieur Godongwana have been nothing short of controversial. The issue that stood out like a sore thumb has definitely been the proposed VAT increase of one percentage point over the course of two financial years as widely reported by bourgeois media outlet, AP News. VAT in economic circles is known and understood to be a regressive tax which targets mainly the poor of the poorest. While the rich can be insulated and will not be largely affected by the VAT increase, the middle class, the working class, the peasantry, the urban poor, the rural poor, the unemployed masses of our people, and the youth in general will not be able to cope under the increase even if the increase is zero-point two percentage points. According to the Minister himself in a video clip widely circulated by fascist owned media outlet, News24, the proposal of increasing VAT was his way of combatting austerity, and a means of increasing government revenue to fund an increase in social grants, health, education, economic growth, and South Africa's defence priorities.
The EFF and MKP have correctly opposed this and provided tangible solutions such as increasing corporate tax from the current twenty-seven percentage points which is lower than apartheid corporate tax rates which at one point stood at forty percentage points. Another proposal was to introduce a wealth tax which can easily fund all of these spending priorities. The DA has also opposed the increase, however, for different reasons. Their reasons are not merely to insulate the poor from this disastrous proposal, but they oppose this with the intention of using this disagreement as a bargaining chip for reversing transformation laws and intensifying the privatisation of state assets. This is part of their proposed agreement to allowing the VAT increase albeit for a year. However, as Marxists, we understand that another year of rapid privatisation will lead to a massacre of the working class and peasantry. Total generations will be given a death sentence which condemns them to economic misery and inequality. This proposed VAT increase will not resolve the crises gripping South Africa but exacerbate them.
The minister also announced an extra five billion rands allocation to strengthen SANDF in its mission in the Eastern DRC as part of SAMIDRC. However, SADC has terminated that interventionist mission after suffering humiliating defeats to Rwandan and Ugandan backed rebel group, M23. The prioritisation of this failed mission which sees SAMIDRC mainly protect mineral rich areas where companies like Glencore and Anglo-American have vast holdings has been widely criticised across the country as a capitalist agenda to not free Eastern DRC from an unending conflict but protect the business interests of multi-national corporations which happen to be partly owned by ANC cadres through BEE schemes. Whilst on the surface the purpose of the mission is noble, beneath the surface we see it for what it is, a capitalist exercise to defend interests of the ruling capitalist class. This extra allocation should have been allocated to other social services, particularly healthcare, social development programmes that seek to combat the scourge of GBV, child-headed households, and poverty relief programmes that encourage the establishment of community-owned, family owned, and worker owned cooperatives.
The EFF and MKP have correctly opposed this and provided tangible solutions such as increasing corporate tax from the current twenty-seven percentage points which is lower than apartheid corporate tax rates which at one point stood at forty percentage points. Another proposal was to introduce a wealth tax which can easily fund all of these spending priorities. The DA has also opposed the increase, however, for different reasons. Their reasons are not merely to insulate the poor from this disastrous proposal, but they oppose this with the intention of using this disagreement as a bargaining chip for reversing transformation laws and intensifying the privatisation of state assets. This is part of their proposed agreement to allowing the VAT increase albeit for a year. However, as Marxists, we understand that another year of rapid privatisation will lead to a massacre of the working class and peasantry. Total generations will be given a death sentence which condemns them to economic misery and inequality. This proposed VAT increase will not resolve the crises gripping South Africa but exacerbate them.
The minister also announced an extra five billion rands allocation to strengthen SANDF in its mission in the Eastern DRC as part of SAMIDRC. However, SADC has terminated that interventionist mission after suffering humiliating defeats to Rwandan and Ugandan backed rebel group, M23. The prioritisation of this failed mission which sees SAMIDRC mainly protect mineral rich areas where companies like Glencore and Anglo-American have vast holdings has been widely criticised across the country as a capitalist agenda to not free Eastern DRC from an unending conflict but protect the business interests of multi-national corporations which happen to be partly owned by ANC cadres through BEE schemes. Whilst on the surface the purpose of the mission is noble, beneath the surface we see it for what it is, a capitalist exercise to defend interests of the ruling capitalist class. This extra allocation should have been allocated to other social services, particularly healthcare, social development programmes that seek to combat the scourge of GBV, child-headed households, and poverty relief programmes that encourage the establishment of community-owned, family owned, and worker owned cooperatives.
The proposed increase of the health budget is a welcome development and must be viewed as fundamentally progressive. However, this increase could have been actualised without relying on VAT to fund it. In as much as this increase seeks to resolve the question of medical personnel and plugging the gap created by the cancelling of PEPFAR by the orange clown in the White House who is led by the perpetual manchild called Elon Musk, this could have easily been done without increasing VAT. The state has opted to do what the minister of finance in France did when he tried to stabilise a feudal economy which was on the brink of total collapse and ultimately would pave the way for the French Revolution. The continued taxing of the middle class, working class, and ultimately the peasantry follows that logic, and history teaches us that it will sow the seeds for a revolution. Placing the burden on the populace will not resolve the question of a backward fiscal policy that relies on tax as its main source of revenue. What needs to be done is looking at other heterodox alternatives that are not limited to introducing wealth tax but look at using some profits and surpluses made by SOEs as a means to not only fund the SOEs themselves, but fund departments like the health department. The amendment of the PIC's mandate from being a typical capitalist investment corporation to being a Sovereign wealth fund which operates similar to the Norwegian wealth fund is another means to fund our health priorities. Nationalisation of strategic sectors is another measure that can be applied to generate more revenue for the state.
One thing economists and political analysts have not seen or thoroughly analysed is the lack of adjustments to personal income tax brackets which lead to 'bracket creeps' or 'stealth tax'. This sees inflation pushing taxpayers into higher tax brackets without any real increases in income. The income stagnation leads an increase in the tax burden of the ordinary worker irrespective of their tax bracket, even though the more well-off taxpayers can be easily insulated. This approach suggests a shift in the tax burden towards the working class and middle-income earners, potentially exacerbating existing social inequalities. The implication of this reality is that we will have less consumer spending and a decrease in internal demand. This decrease in internal demand leads to a gradual decrease in production meaning that some firms will close, leading to retrenchments. The lesser the demand, the lesser the production, and it does not help us that there is a global slump in consumer spending and demand due to various economic factors not limited to inflation and interest rates, and MAGA tariffs. It also does not help that consumer spending and demand declined in USA this January, with some economists suggesting that we are only months away from the biggest global meltdown of all time according to bourgeois news channel CNN.
Recognizing that early childhood development is essential for long-term educational performance, the budget places a strong emphasis on the value of early childhood education. This emphasis is in line with previous government initiatives to establish a mandatory school year for children aged five to six and incorporate early learning centers under the Department of Basic Education. However, many programs encounter obstacles because of a lack of finance and implementation issues. These difficulties draw attention to the inconsistencies between the state's goals for education and the current financial limitations from a materialist perspective. While specific allocations for basic and higher education were not specified in the budget to our desire, the overall fiscal strategy indicates a tightening of public expenditure. The struggle to adequately fund early education reflects deeper problems within the capitalist structure, where resources are unevenly distributed, often leaving essential public services underfunded. The increased tax burden on lower and middle-income groups may limit their access to high-quality education because households may have less money to invest in educational resources. Additionally, public education systems may experience underfunding if the additional revenue generated is not designated for educational improvements, impeding efforts to address historical disparities in educational access and quality.
One thing economists and political analysts have not seen or thoroughly analysed is the lack of adjustments to personal income tax brackets which lead to 'bracket creeps' or 'stealth tax'. This sees inflation pushing taxpayers into higher tax brackets without any real increases in income. The income stagnation leads an increase in the tax burden of the ordinary worker irrespective of their tax bracket, even though the more well-off taxpayers can be easily insulated. This approach suggests a shift in the tax burden towards the working class and middle-income earners, potentially exacerbating existing social inequalities. The implication of this reality is that we will have less consumer spending and a decrease in internal demand. This decrease in internal demand leads to a gradual decrease in production meaning that some firms will close, leading to retrenchments. The lesser the demand, the lesser the production, and it does not help us that there is a global slump in consumer spending and demand due to various economic factors not limited to inflation and interest rates, and MAGA tariffs. It also does not help that consumer spending and demand declined in USA this January, with some economists suggesting that we are only months away from the biggest global meltdown of all time according to bourgeois news channel CNN.
Recognizing that early childhood development is essential for long-term educational performance, the budget places a strong emphasis on the value of early childhood education. This emphasis is in line with previous government initiatives to establish a mandatory school year for children aged five to six and incorporate early learning centers under the Department of Basic Education. However, many programs encounter obstacles because of a lack of finance and implementation issues. These difficulties draw attention to the inconsistencies between the state's goals for education and the current financial limitations from a materialist perspective. While specific allocations for basic and higher education were not specified in the budget to our desire, the overall fiscal strategy indicates a tightening of public expenditure. The struggle to adequately fund early education reflects deeper problems within the capitalist structure, where resources are unevenly distributed, often leaving essential public services underfunded. The increased tax burden on lower and middle-income groups may limit their access to high-quality education because households may have less money to invest in educational resources. Additionally, public education systems may experience underfunding if the additional revenue generated is not designated for educational improvements, impeding efforts to address historical disparities in educational access and quality.
Economic growth and labour force productivity are intimately related from a historical materialist standpoint. Because consumers' purchasing power declines when regressive taxes like VAT are raised, economic growth may be slowed. Furthermore, disposable incomes are essentially decreased when income tax bands are not adjusted for inflation, which further reduces consumption. Because people could have less money for education and skill development as a result of these policies, there may be less investment in human capital, which would eventually affect the long-term economic prospects of the country. The budget proposals indicate the inherent contradictions that exist within this liberal bourgeois state, and how it interacts with the capitalist economy. On one hand, the state wants address fiscal and budget deficits and ultimately stabilise the fiscus; on the other hand, it implements methods that will disproportionately affect the working class, potentially leading to social unrest and resistance that is the perfect opening for a social revolution. The intense opposition to this increase by a fellow GNU partner DA, and two of the biggest opposition parties outside of the GNU (EFF and MKP) highlights the tensions that exist both within the ruling classes and outside of the ruling classes. This disagreement within the GNU could lead to a collapse of this grand coalition of neoliberalism and lead to a reconfiguration of politics in South Africa.
Conclusion
The fiscal measures proposed in the 2025 budget, particularly the VAT increase and the lack of adjustments to income tax brackets, appear to shift the tax burden towards lower and middle-income populations. This shift could exacerbate social inequalities, limit access to education, and dampen economic growth by reducing aggregate demand. A historical materialist analysis suggests that such policies may reinforce existing class structures and contradictions within the capitalist system, potentially leading to increased social tensions and challenges to the legitimacy of the ruling coalition. Our call as revolutionary readers and supporters of this revolutionary blog, The Spark, is to end this system which continues to increase the numbers of the unemployed, impoverished, and those living in a state of permanent misery. For the youth, we have no inheritance in this set-up, ours is to go to our proverbial tents, and prepare for a total war against neoliberalism. We must make the picket lines fashionable to the youth and revive political consciousness. Marcus Garvey once said that a time will come where the people will be mobilised by their own conditions. We firmly believe that time has arrived, and it is time to END NEOLIBERALISM NOW! THE WORKING CLASS, PEASANTRY, STUDENTS, AND THE UNEMPLOYED YOUTH & WOMEN MUST MARCH IN UNISON TOWARDS A TOTAL DEFEAT OF NEOLIBERALISM IN SOUTH AFRICA, AFRICA, AND THE WORL IN GENERAL!
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