It was a difficult process, says Mbalula on VAT withdrawal as uncertainty looms over budgetary shortfall

Daily Maverick

24-04-2025

While the DA and other parties celebrated the withdrawal of the 0.5 percentage point VAT increase, they haven't figured out how to fill the budgetary shortfall.
After weeks of negotiations over a Budget deadlock, Finance Minister Enoch Godongwana's surprise overnight withdrawal of the proposed 0.5 percentage point VAT increase has left one major question unanswered: How will the R13.5-billion budgetary shortfall now be addressed? For now, the hard work appears to be just beginning.
With the VAT hike off the table, the pressure is mounting to chart a new fiscal path. Bosa leader Mmusi 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.'
This uncertainty emerged on Thursday, 24 April 2025, as political parties that supported the fiscal framework — namely the ANC, IFP, ActionSA, PAC, Rise Mzansi, Bosa, UDM, Good, Al Jama-ah, the Patriotic Alliance, and the National Coloured Congress — held a media briefing in Sandton, Johannesburg.
When asked by Daily Maverick how the Budget gap would be filled, ANC Secretary-General Fikile Mbalula said: 'We have not arrived at that, it is a second process that we have to embark on.'
In a statement on Thursday night, the National Treasury said: 'By not increasing VAT, estimated revenue will fall short by around R75-billion over the medium term.'
Reflecting on the tense lead-up to Godongwana's decision, Mbalula added: 'It was a difficult process, but it has given us the result and we are very much happy about that.'
On when consensus among the parties was actually reached, he responded: 'It was very clear that we had reached a consensus, we knew that our demand and the concerns had been agreed to. That is why we did not rush to make an announcement ahead of the minister.'
DA 'hypocrisy'
The political parties that voted in favour of the fiscal framework pushed back against claims that the decision to scrap the VAT hike was a result of the DA's court challenge.
Patriotic Alliance deputy president Kenny Kunene dismissed the DA's celebration as disingenuous, saying: 'The DA has no moral authority to claim victory for the removal of the VAT increase. They weren't even part of this discussion. The parties that are sitting here can take credit.'
Kunene accused the DA of hypocrisy: 'The DA waking up and claiming victory is hypocritical. They never rejected the VAT increase in the first place. Instead, they tried to use it to bargain for positions in the Government of National Unity (GNU).'
IFP national spokesperson Mkhuleko Hlengwa echoed similar sentiments, accusing the DA of behaving with a 'big brother' syndrome.
'We're not going to find solutions in the courts or the streets,' he said, emphasising that real negotiations were taking place among the parties represented at the briefing.
Fadiel Adams, the leader of the National Coloured Congress (NCC), was also critical of the DA's claim of victory: 'The DA played no part in this, this is our work. This is us coming together and saying, 'Let us put our differences aside. The DA must be honest and say we would have voted for the VAT if you allowed us to have the ports, roads and railways, if you allowed us to take the Western Cape into a bigger version of Orania,' Adams claimed.
The DA allegedly tried to use the Budget negotiations to win concessions on pieces of legislation it opposes, including the Bela Act, Expropriation Act and National Health Insurance Act. It reportedly also wanted a stronger role in developing economic policy.
The DA took the VAT hike to court and on Thursday its Federal Council Chairperson Helen Zille said: 'Today is a cause for celebration because it is the clearest indication yet of what it means to enable a party like the Democratic Alliance, fighting for the people of South Africa, to have the balance of power in the national Parliament.'
She added: 'The issue that the ANC fears more than anything else is that the public will come to understand the extent of the DA's muscle in holding the balance of power and the impact that we can make, both through the political process and then the legal process, if the political process proves impermeable, as it did this time.'
On the GNU
While the ANC has touted a possible reset of the Government of National Unity (GNU), tensions within the arrangement continue to surface. Hlengwa took a direct swipe at the DA's dual role — being part of the GNU while voting against the Budget and going to court — saying: 'You cannot be in government today and opposition the next day.'
Mbalula said he was surprised the DA remained in the GNU. He would not be drawn into commenting further about a reconfigured GNU that could include the likes of ActionSA and Bosa, among others.
While it's unlikely the DA will exit the GNU voluntarily, the ultimate decision on whether the GNU remains intact rests with the ANC's highest decision-making body, the National Executive Committee (NEC).
Two weeks ago, ANC 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. We are going to reconfigure the alliance and we are going to reconfigure the GNU 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.
In a collective statement, the ANC and other parties at the press briefing on Thursday said: 'The discussions required maturity above all, and were all intensely focused on achieving consensus, which was necessary to resolve the budget impasse.
'We affirm the constitutional mandate of the Treasury and that they have been responsive to the inputs and suggestions of the political parties in the engagements. This demonstrated that no one party is the alpha and omega in providing solutions for South Africa, a collective approach by all parties that represented here have put South Africa first and made sure that the Budget is approved.' DM