Political parties were quick to claim victory after the National Treasury’s announcement in the early hours of Thursday, 24 April, that the 0.5 percentage point VAT increase would be scrapped.
“While some continued to play politics, ActionSA made substantive submissions of revenue alternatives to the finance minister and began a series of engagements with the ANC,” said party leader Herman Mashaba, adding that the victory “belongs to you, the people of South Africa”.
“Bosa took the lead, stayed the course and did the hard work, even when it was tough, thankless and at times unpopular,” said Mmusi Maimane, who leads Build One South Africa.
“This decision was made due to pressure from various quarters, including the Freedom Front Plus,” said the party’s Corné Mulder.
Perhaps the most galling response came from the ANC, whose national executive committee member, Finance Minister Enoch Godongwana, originally planned to table a two percentage point VAT increase before reducing it under pressure from parties in the government of national unity (GNU). Godongwana had previously described the tax increase as necessary to move away from austerity budgets and support front-line health, education and police services.
“The ANC has never supported a regressive tax policy that burdens the working class and the poor. The proposed 0.5% VAT increase was never the position of the ANC,” the party said on Thursday.
The ANC said it had led “an unprecedented process of inclusive engagement” and the “moment has ushered in a new chapter in our democratic evolution – one where principled cooperation, not narrow political point-scoring, shapes the national agenda”.
In a joint statement, parties that had supported the Budget’s fiscal framework in Parliament said the scrapping of the VAT increase was “not a victory for any single party, nor is it about who claims the loudest voice. This is a people’s victory. It is a quiet but profound triumph of democratic institutions – of Parliament acting as the voice and shield of the nation.”
Those parties – the IFP, ActionSA, the PAC, Rise Mzansi, Bosa, the UDM, Al Jama-ah, the Patriotic Alliance, Good and the National Coloured Congress – emphasised that the victory was the result of consultation and collaboration. When they held a joint press conference on Thursday, the GNU’s second-biggest party, the DA, was conspicuously absent, revealing deep divisions in the governing coalition.
The ANC had harsh words for its GNU partner: “It must be stated without ambiguity: the DA did not win in Cabinet, in Parliament, or in the courts. What they seek to brand as a ‘victory’ is in fact the result of ANC-led consultations and consensus-building. The DA’s typical opportunistic attempt to claim victory is a continuation of their typical insult to South Africans whom they consider voting cattle with no sense of thinking or reasoning.”
Read more: DA claims win in Treasury VAT U-turn, says ANC ‘deception happens repeatedly’ in GNU
The DA has claimed that its “muscle in court” forced Godongwana’s hand in the reversal.
In a press conference at Parliament on Thursday morning, DA federal council chairperson Helen Zille said the party’s legal challenge to the VAT increase was “pivotal” in the National Treasury’s about-turn.
She said there was “no doubt that the minister, in trying to save face, will seek to present this as the result of his discussions with the smaller parties”.
But, she said, this argument “cannot hold water” because most of the negotiations happened with the smaller parties before last Thursday, 17 April, and yet on that day “the minister categorically said that the VAT increase would go ahead and that there was indeed no alternative to it”.
“We can win battles, not by the grace and favour of kind concessions of the ANC, but because we have the numbers in Parliament and we have the muscle in the courts,” Zille said.
The DA and ANC were scheduled to meet on Friday, 25 April, after an expected meeting between the two parties on Thursday morning was postponed by ANC secretary-general Fikile Mbalula on Wednesday night, according to Zille.
Responding to a question on the future of the GNU, Zille simply said she was not in a position to say “whether or under what circumstances [it] should continue”.
“What the future is going to be for the GNU is something that I cannot categorically answer now. A lot will depend on what happens today [Thursday],” she added.
Illustrative image. From left: Mmusi Maimane, Songezo Zibi, Patricia de Lille and Herman Mashaba. These political leaders supported the budget's fiscal framework and the scrapping of VAT. (Characters designed by Bernard Kotze with the help of AI.)
GNU partners at odds
While the ANC has touted a possible reset of the GNU, tensions in the arrangement continue to surface. IFP national spokesperson Mkhuleko Hlengwa took a direct swipe at the DA on Thursday, saying: “You cannot be in government today and in opposition the next day.”
The DA and other GNU partners have accused Godongwana of failing to meaningfully consult them before tabling the Budget. On Thursday, Zille said the ANC had repeatedly ignored the statement of intent, which outlines the principles that are supposed to guide the GNU, and described the ANC’s decision to consult with parties outside the coalition as “devious”.
Read more: VAT deal means GNU stays — just in time as new survey shows South Africans are gatvol of the drama
A number of GNU members have previously mentioned that the VAT fiasco could have been avoided if the ANC had consulted its partners before the Budget was tabled.
Daniel Silke, a political economy analyst and director of the Political Futures Consultancy, told Daily Maverick that the GNU as it stands was “hanging on a thread”, but there was an “off-ramp” for the DA and the ANC to reconcile some of their differences.
Silke said that the ANC now claiming to always have been against a VAT increase provided an avenue for both parties to “at least bury the hatchet partially”.
He added: “I think that there’s increasing tension within the ANC over the DA’s role in the GNU… It’s clear that the level of critique the DA employed in this particular issue has not won them friends within the ANC firstly, and, secondly, we are seeing a build-up to 2027 and that ANC elective conference.
“The DA has been in the ANC’s face on this issue and, notwithstanding the issues surrounding VAT, I think there are elements in the ANC that are finding this increasingly unpalatable, and the elective conference in 2027 is going to really be the key catalyst as to whether this GNU can survive to 2029,” Silke said.
Godongwana gazetted the Rates and Monetary Amounts and Amendment of Revenue Laws Bill on Thursday.
Parliament now has to adopt the bill, but it’s uncertain whether this will happen before 1 May.
However, the scrapping of the VAT hike has left one question unanswered: how will the R13.5-billion budgetary shortfall be addressed? For now, the hard work appears to be just beginning.
Maimane, who also chairs Parliament’s Standing Committee on Appropriations, warned of the work that lies ahead, saying: “A revised fiscal framework has to be tabled to the Finance Portfolio Committee, that then will come to the Appropriations Committee.”
Read more: VAT debacle shines a light on a fragile coalition – and R75bn question remains
This uncertainty emerged on Thursday as the 10 political parties that supported the fiscal framework held their media briefing in Sandton.
Asked by Daily Maverick how the Budget gap would be filled, Mbalula said: “We have not arrived at that; it is a second process that we have to embark on.”
In a statement later on Thursday, the National Treasury said: “By not increasing VAT, estimated revenue will fall short by around R75-billion over the medium term.”
Two weeks ago, Deputy President Paul Mashatile confirmed that the ANC would reconfigure the GNU to include other parties that want to work with the ANC.
“Now, the leadership of the ANC, after what has happened recently, decided that we are going to reconfigure the alliance ... to ensure that we bring other parties on board to work with us, but also to ensure that we discuss this properly with all the parties,” Mashatile said. DM
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