DA leader John Steenhuisen
Image: Ayanda Ndamane / Independent Newspapers
The Democratic Alliance (DA) has suffered a bloody nose after losing the fight over the controversial VAT hike in the proposed 2025 Budget.
This, after the African National Congress (ANC) supported a proposal by ActionSA to remove the 0.5% VAT increase, giving taxpayers some much-needed breathing room.
The proposal, spearheaded by ActionSA MP Alan Beesley, calls for a 30-day halt in the Budget process to allow the National Treasury to revise the country’s fiscal framework. The aim is to roll back the proposed 0.5-percentage-point hike in VAT and prevent further erosion of disposable income through “bracket creep” in the personal income tax system.
The ANC proposed an amendment to the fiscal framework to remove the VAT and income tax increases for 2025/2026 during parliament's joint committee on finance debate on Tuesday.
The DA's alternative proposal to eliminate the VAT increase and achieve a balanced budget through spending cuts did not receive support in the committee.
Joe Maswanganyi, the ANC-aligned chairperson of the Standing Committee on Finance, is driving the push for a vote on the revised fiscal framework. Between the ANC, ActionSA, and the Inkatha Freedom Party (IFP), the grouping now commands a majority in the committee.
The Select Committee on Finance, which will vote separately, is also under ANC control, making it increasingly likely that the fiscal framework will be amended in line with ActionSA’s proposal.
In a statement, the DA said their suggestion would have created growth and jobs, cut the waste in government and stopped VAT hikes – but with the ANC and ActionSA have denied South Africa economic growth.
"The DA condemns this sell-out tactic by ActionSA, which has worked with the ANC to adopt the budget and has condemned the poorest South Africans to a higher cost of living. By adopting this budget, without the reforms and changes that were needed, ActionSA has shamefully shut down the required government spending review. This is extremely irresponsible and will hand a blank cheque to the ANC to continue spending government money without review," said the party.
The party blasted Action for being a sell-out saying initially, ActionSA publicly committed that it will not support the ANC’s VAT budget, however, they made a sudden turn around and supported it.
"This is also a serious infraction by the ANC, which has crossed a line in the sand by getting the budget approved using a party that is not in the Government of National Unity GNU."
Earlier, Beesley confirmed that the parties met on Sunday to discuss the 2025/26 national budget.
"The talks centred around ensuring that the budget protects South Africans from excessive tax, worsening pressures and the decline in service delivery.
"Recognising the imperfect nature of the budget and the crisis that the Government of National Unity partners themselves have created with uncertainty around the country’s fiscal framework— which will have disastrous consequences if an impasse continues — ActionSA set aside a long list of budget reforms in exchange for its conditional support of the budget’s passage, with strict conditions," Beesley said.
"We have put forward viable alternatives to cover the revenue gap, which we have done to show that protecting South Africans from unnecessary tax hikes is both possible and necessary without political grandstanding," he said.
This development has already had ripple effects. The planned National Assembly sitting scheduled for Wednesday is now expected to be postponed. Parliamentary rules require the Minister of Finance to be given at least 48 hours to respond to any significant change in the fiscal framework.
Should the ActionSA amendment proceed, the entire Budget process will be suspended for 30 days. This pause is intended to give Treasury time to rework the numbers and submit a revised fiscal framework to Parliament
sinenhlanhla.masilela@iol.co.za
IOL
Get your news on the go, click here to join the IOL News WhatsApp channel.
Related Topics: