Neelam Rahim | neelam@radioislam.co.za

3-minute read
23 February 2025 | 12:22 CAT

IRR’s Gabriel Krause advocates for cutting BEE premiums to save R150 billion, aiming to boost the economy and ease the tax burden on South Africans.

The unprecedented delay in tabling South Africa’s budget has sparked calls for a fundamental reassessment of fiscal priorities, with the Institute of Race Relations (IRR) leading the charge.

The IRR has submitted its “Cut VAT and BEE Premiums” blueprint to Parliament’s finance committees, advocating for significant cuts to Broad-Based Black Economic Empowerment (BEE) premiums in public procurement. Gabriel Crouse from the IRR estimates that eliminating BEE premiums could save the government up to R150 billion annually.

“Public procurement accounts for R1.1 to R1.2 trillion each year. Direct BEE premiums add an estimated R17 billion to this, but the real cost—through inefficiencies and corruption—could be closer to R150 billion,” Crouse explained.

The IRR’s proposal argues that cutting BEE premiums could reduce the Value-Added Tax (VAT) from 15% to 11.5%, injecting R100 billion back into the economy. “This would directly benefit the poorest South Africans, potentially increasing the social grant from R370 to R430 without increasing national debt,” Crouse noted.

However, the issue has highlighted troubling gaps in government transparency. When asked about the actual cost of BEE premiums, Treasury officials, including Acting Chief Procurement Officer Vilimatibula, admitted they couldn’t provide precise figures. “It’s shocking that Treasury, which oversees R1.2 trillion in spending, doesn’t know how much is going to BEE premiums,” said Crouse.

ANC Secretary General Fikile Mbalula, when questioned about the lack of transparency, responded dismissively: “Let’s wait.” Crouse criticized this stance, saying, “South Africans deserve to know how their taxes are spent. We need a debate grounded in facts, not abstractions.”

As the country awaits the rescheduled budget announcement, the IRR’s call for reform raises pressing questions about fiscal responsibility, transparency, and the true cost of empowerment policies in South Africa.

Listen to Moulana Junaid Kharsany’s and Gabriel Crouse’s full interview on The Daily Round-Up.