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The Herald
22-05-2025
- Business
- The Herald
Sceptism from opposition but the budget gets a nod from GNU partners
Finance minister Enoch Godongwana received a nod from the GNU partners but sceptism from opposition benches when he presented his third-time-lucky budget speech. With a visibly relaxed and confident demeanour, Godongwana presented a budget wrapped in comic anecdotes — with nodding and clapping from the DA benches indicating success for the minister. The DA, as a GNU partner with whom the ANC shares 60% of the seats in the National Assembly, said it 'cautiously welcomes the revenue and expenditure proposals'. The DA rejected the previous budget's proposal to increase VAT and challenged it in the courts. However, the decision to drop the VAT increase carved a pathway to gaining the DA's support, a move which the party believes is 'manifestation of coalition politics in action'. The DA's spokesperson on finance, Mark Burke, described the budget as a workable outcome in the context of trying economic times. ' The DA was not prepared to get behind a budget that maintained unsustainable government expenditure on the back of raising VAT, making struggling South Africans pay for inefficiencies and waste in government — but today's version from minister Godongwana has gone some way to undo this. 'It is a victory for all South Africans that the mooted VAT hike has now finally been removed from the minister's revenue proposals, after the DA court action in this regard. We see this budget speech as a turning of the tide toward growth and investment. It is turning away from unchecked government spending funded by South African taxpayers.' The party welcomed the R1-trillion investment in infrastructure over the next three years, the snub on bailouts to state-owned entities, a national spending review which must eliminate all wasteful spending, and ending low-priority projects. ' The DA realises our economy desperately needs to grow and government must budget for this, creating the environment that enables this growth in the private sector. We also note that more realistic economic growth forecasts have been used to model revenue in this version of the budget.' Despite Godongwana's U-turn on the proposed VAT hike, the EFF, which was vocal and opposed to the proposed VAT hike in the previous tabling of the budget, rejected Wednesday's presentation. Calling it weak, misguided and disconnected from the lived reality of South Africans, the EFF says the absence of President Cyril Ramaphosa and his deputy Paul Mashatile is a further indicator of how disconnected the executive is from the economic realities facing the poor and the working class. 'We note the deliberate silencing of public discourse around this budget, with mainstream media choosing to focus obsessively on political coalitions and cabinet appointments, while ignoring one of the most consequential events in South Africa's governance calendar. This is not accidental — it forms part of a broader campaign to depoliticise the budget and shield the National Treasury from democratic scrutiny and public accountability.' Party spokesperson Sinawo Tambo criticised Godongwana for reportedly ignoring proposals from stakeholders and the majority of parties in parliament who claimed that the scrapping of the VAT hike was a product of consultation. 'Not a single alternative revenue-generation mechanism proposed by any political party is present in this third budget, proving once again that the VAT increases were scrapped solely due to the court intervention which was initiated by the EFF. The VAT increases have simply been substituted with austerity.' Action SA, which played a crucial role in helping the ANC pass its first fiscal framework in the budgeting process, said it was in two minds over Godongwana's proposed expenditure and revenue plans. Herman Mashaba's party welcomed the additional R7.5bn allocated to Sars over the medium term, a move the party had long insisted on. However, they disagreed with the suite of taxes and levies in the absence of what they described to be meaningful action to curb government wastage. In a statement, the party said while South Africans are still being forced to carry the burden of an extra R22bn through income tax bracket creep, an increase in the fuel levy, and duty hikes, the funding boost to Sars marks a critical step in the right direction. 'In his speech today, the finance minister confirmed that Sars' performance will be monitored monthly, with the potential for R20bn in tax relief to be granted in the 2026 budget if revenue collection exceeds targets. ActionSA is confident Sars will deliver on this promise, helping to ease the financial pressure on struggling South Africans.' Rise Mzansi said it was content that the budget baseline remained the same, however they would have wanted additional allocations to things that matter to South Africans — such as health, safety, education and economic infrastructure. The party believes the country will get out of its financial rut only by making smart, yet tough, decisions. 'Over the past few months, the people of South Africa have made it clear that they do not want to give the government any more money, and that with the existing money, elected representatives must make the country work. This is a fair demand, which has placed us in the difficult position we are now in, notwithstanding an almost 15-year period of poor policy decisions and wanton corruption. 'This is particularly about arresting corruption, how we spend money, and what we spend that money on. Especially, when we are told that the GDP growth outlook has been revised down from 1.9% to 1.4% for 2025, with projections also revised downwards over the medium-term. The consequence of this is also muted revenue collection.' P arty leader and Scopa chair Songezo Zibi said it is important to ensure that the debt-servicing costs and interest which costs the fiscus about R1.2bn a day, must not be placed at the feet of future generations as a burden. 'Any further borrowing must be about igniting economic growth and a jobs boom. Borrowing to plaster over poor decisions is something Rise Mzansi will fight against. In this context, it is of the utmost importance that we focus on making the right policy choices that may not bear fruit today but are for the future, which means investing in skills and education that will contribute to the building of a modern and resilient economy. 'Furthermore, we must aggressively invest in infrastructure and health. We must invest in the things we need, not the things we want.' Zibi vowed to use his position at Scopa to advance accountability, ensuring that every rand is spent properly and accounted for, and that savings are cemented. 'We will work with the National Treasury to claw back on wasted and recklessly spent public funds. The next few years will tough, particularly for poor, working-class and middle-class South Africans, but with mature leadership, which often means making politically unpopular decisions, we will be able to get out of this mess, and truly build a prosperous South Africa.'
IOL News
21-05-2025
- Business
- IOL News
Budget 3. 0 Reaction: Praise for social relief, criticism of growth gap
Finance Minister Enoch Godongwana presented Budget 3.0 on Wednesday amid political strife and economic uncertainty, with expectations of expenditure cuts and a downward revision of GDP growth forecasts. Image: Picture supplied Opposition parties had mixed reactions to Finance Minister Enoch Godongwana's Budget 3.0 speech, with most welcoming the maintenance of social grants but warning the budget lacks the bold reforms needed to lift South Africa out of economic stagnation. The DA's Dr Mark Burke said the minister 'missed a critical opportunity to deliver a budget that drives reform, cuts waste, and boosts growth". While the DA welcomed the scrapping of the VAT increase and the absence of personal tax hikes, Burke said this offered little comfort amid rising food and transport costs. 'The fuel levy hike is yet another indirect tax on poor and working South Africans. We are funding a failing state instead of fixing it.' The uMkhonto weSizwe Party (MKP) was equally critical. Party spokesperson Nhlamulo Ndhlela said: 'This budget does not serve the poor. It's a continuation of ANC elite policies that benefit the few while the masses remain unemployed and hungry.' The MKP also raised concerns about debt levels, stating there was no clear plan to rescue the economy or reform public institutions. The Economic Freedom Fighters (EFF) spokesperson Sinawo Thambo also tore into the budget, calling it 'austerity masquerading as care". 'The ANC government cuts essential services, underfunds municipalities, and still expects the economy to grow. This is not a pro-poor budget; it's a pro-corruption budget.' The EFF decried infrastructure cuts and job creation allocations, warning that youth unemployment would worsen. In contrast, the ANC defended the budget. ANC national spokesperson Mahlengi Bhengu-Motsiri said the party welcomed the continued support for vulnerable groups. 'The preservation of social grants and increases in old age and child support grants affirm the ANC's commitment to the poor,' she said. Bhengu-Motsiri noted that investment in infrastructure and hiring of new police, teachers and health workers would 'help improve service delivery". Build One South Africa (BOSA) acting spokesperson Roger Solomons acknowledged the short-term relief through grants and the scrapping of the VAT hike, but raised alarm about shrinking infrastructure spend and job creation. 'The infrastructure budget has been halved. You can't speak of growth without roads, water, and energy systems to support it,' he said. Solomons also rejected cuts to frontline worker allocations, saying, 'This will severely impact essential service delivery". Inkatha Freedom Party (IFP) president Velenkosini Hlabisa struck a cautious tone. 'The good aspect is that frontline services, education, health, and social grants were maintained,' he said. But he criticised the removal of zero-rated food items and the fuel levy hikes, warning: 'These measures will increase food prices and hurt the poorest. The budget must be monitored closely to ensure funds are used prudently.' Cosatu parliamentary coordinator Matthew Parks said the labour federation welcomed 'the scrapping of the VAT hike, expanded public employment programmes, and infrastructure investments". However, he warned that 'municipalities are collapsing, and without local government reform, the economy will remain trapped". Parks said the country was not in a crisis of revenue but in a crisis of growth and said the labour federation is calling for urgent reforms in energy, transport, and state capability.
Eyewitness News
21-05-2025
- Business
- Eyewitness News
ANC, DA say they've finally found consensus on budget differences
JOHANNESBURG - The two biggest parties in the Government of National Unity (GNU), the African National Congress (ANC) and the Democratic Alliance (DA), say they have finally found consensus on their budget differences. On Wednesday afternoon, Finance Minister Enoch Godongwana will present his third attempt at a national budget before Parliament, sitting at the Cape Town International Convention Centre. The previous budget led to an acrimonious division between the two coalition partners, with the DA voting against the budget and successfully challenging it in court. On the other side, the ANC enlisted parties outside the GNU to help it pass the budget once the DA indicated it would be voting against it. "It's been a positive engagement on the budget. We hope that what we will see on this budget is a focus on infrastructure investment and we will not be funding that through tax increases, be that in increases to Value Added Tax (VAT), direct increase in personal or corporate tax," said DA spokesperson on Finance, Mark Burke. READ: Budget 3.0: Godongwana should prioritise economic growth, says economist ANC parliamentary chief whip, Mdumiseni Ntuli, said budget consultations within the GNU had improved this time around. "Our own understanding is that all parties in the GNU have agreed with the budget that is going to be presented, but you see in issues around budget there may be small variations here and there where somebody says after the budget is presented, 'I agree but I prefer that he raises this money a bit or lower that money a bit' but those are going to be minor issues which would not necessarily suggest there are disagreements which may result in the budget not being passed."
News24
22-04-2025
- Business
- News24
DA, EFF unite against ANC's VAT increase, say it's 'a blunder' set to harm the poor
The DA and EFF have united in their legal fight against the ANC's proposed VAT increase, calling the move a 'blunder' that will harm millions of South Africans already struggling under economic pressure. On Tuesday, the two parties took to the Western Cape High Court, demanding that the VAT hike, set to take effect on 1 May, be blocked. The DA described the increase as 'anti-growth, anti-poor, and anti-jobs,' while the EFF slammed the ANC for misleading the public and pushing through a flawed process. With the case now in court, both parties say they are determined to halt the tax increase, which they argue will only deepen inequality and exacerbate the nation's financial woes. DA finance spokesperson MP Mark Burke addressed the media outside the court in Cape Town, where the party's urgent application to interdict the VAT hike was being heard. Burke was adamant in his opposition, stating that the VAT increase would disproportionately affect the poor, pushing more people into poverty while doing little to resolve South Africa's ailing economy. He said: We oppose this anti-growth, anti-jobs and anti-poor VAT-based budget. It takes money from people who can't afford it and gives it to those who don't know how to use it. He described the proposed budget as 'debilitating,' warning that it would make life even harder for South Africans already grappling with the high cost of living, rising transport costs, and a lack of job opportunities. 'This budget will lead to more young people losing hope when they realise they'll be poorer than their parents,' Burke said. 'It's a blind and blundering approach.' While standing firm in opposition to the VAT increase, Burke made it clear that the DA was not against the idea of a national budget altogether. Instead, he said, the party wants a budget that fosters economic growth and avoids wasteful spending. 'We would support a budget focused on infrastructure investment and no new bailouts,' he said. 'We engaged in the budget process in good faith, but the ANC chose to ignore our input and push through this plan anyway.' The DA's legal team argued in court that the VAT hike was rushed and would have a devastating effect on ordinary citizens. The party is hoping the court will block the increase from being implemented. Burke also touched on the political mood in the country, citing recent polling that shows growing support for the DA. 'The times they are a-changing,' he said, quoting Bob Dylan. 'Part of this change is rejecting the ANC's outdated and damaging policies.' Burke questioned how long the ruling party would continue ignoring the voices of ordinary South Africans. He said: How many ears must one party have before they can hear people cry? How many times can you turn your head, pretending that you just don't see? The court is expected to deliver its ruling soon. In the meantime, the DA says it will continue to push back against any policy it believes will harm the economy and deepen inequality. The DA's court action centres on the party's opposition to the 0.5 percentage point VAT hike, which they believe will have a negative impact on the economy. Early in April, the party filed an urgent court application at the same court, challenging the adoption of the 2025 Fiscal Framework and Revenue Proposals, which include the VAT hike. The party claims that the decisions taken by the National Assembly and National Council of Provinces were "fundamentally flawed" and "unlawful." "The VAT hike is a regressive tax that will hurt the poor and vulnerable the most," the DA wrote in its court papers. While the DA voted against the VAT hike, the ANC was helped to get it passed, thanks to other parties in and outside of the government of national unity (GNU). The EFF, which has also approached the courts, has endorsed the DA's court case to halt the 0.5% VAT hike, arguing that claims of South Africans receiving refunds if the VAT hike is later reversed are misleading. EFF spokesperson Sinawo Thambo dismissed recent attempts by political parties to reverse the VAT hike as 'nonsensical' and a sign of 'undermining the intelligence of the South African people.' Thambo took aim at Build One SA leader Mmusi Maimane for suggesting that the fiscal framework could be amended or withdrawn after approval. 'That is not possible,' Thambo said bluntly. He said: This is the delusion that he's existing under – and we'll need to correct that in the Appropriations Committee this morning. Thambo further explained that the window to challenge the VAT hikes was during the adoption of the fiscal framework by the standing committee on finance. He said Parliament had the chance to reject the framework and propose alternative revenue strategies to close the R28 billion budget shortfall. He argued: You can't now want to retrospectively amend the fiscal framework by smuggling in recommendations in the Appropriations Bill or Division of Revenue Bill. Those bills don't deal with fiscal framework-related matters. Thambo slammed what he described as '30 days of negotiations' as a waste of public time and labelled the political parties that supported the original fiscal framework — which included the VAT hikes — as complicit. 'They must take responsibility. Now they're twisting and turning, suggesting the VAT hike can be reversed after two months. What happens to the VAT that South Africans have already paid during that time? Are millions of consumers going to get refunds? It's ridiculous. It's misleading.' He placed blame squarely on the ANC, accusing the governing party of leading others into a 'blunder' by giving the impression that the framework could be altered after approval. 'At the centre of this blunder is the African National Congress,' Thambo said. 'They gave political parties the impression that they could change something after already supporting it in Parliament.' Despite his criticism of fellow opposition leaders, Thambo expressed cautious optimism that the court applications brought by the EFF and DA to stop the VAT increase would succeed. 'If they don't, we'll continue the fight — either on the picket lines or by pushing for amendments in the division of revenue legislation that actually benefit the people.' Advocate Michael Bishop SC, representing the DA, told the High Court that the parliamentary process followed in approving the VAT increase was unlawful and warned that the hike, set to take effect from 1 May, cannot be reversed or refunded once implemented. Arguing on behalf of the DA in a legal challenge against the increase, Bishop said the party was not in court simply because it lost the parliamentary vote on the fiscal framework but because the process itself violated constitutional principles. Bishop told the court: Our case is that Parliament followed an unlawful process and did not take a lawful decision about the fiscal framework — and therefore about the VAT increase. We didn't lose in Parliament. That's why we're here. Bishop took issue with Section 74 of the VAT Act, which allows the Finance Minister to announce tax increases in the Budget speech, noting that it places legislative approval after the fact — potentially even allowing the VAT hike to take effect before Parliament votes on it. 'That's a structural flaw,' Bishop said. 'Section 74 is not linked to the annual budget process, and that creates a democratic deficit.' Highlighting the financial burden on consumers, Bishop argued that once VAT is collected at till points from 1 May, there is no realistic way to refund that money. 'You and I and everybody in this room will start paying more when we go to the grocery store. That money will be forever in the National Revenue Fund. There's no way to return it to consumers.' He explained that while vendors (like Pick n Pay or Checkers) pay VAT collected from shoppers to Sars, there is no mechanism to trace individual consumer payments and refund amounts. 'It's just not practical — imagine a vendor trying to say, 'I owe you R3.22, I owe you R4.76.' It won't happen.' Bishop also dismissed any claims that the VAT hike was regulatory in nature, insisting it was purely a revenue-generating move. 'The minister himself says this increase reflects his best judgment on how to raise the revenue required to fund public goods,' he noted. 'That's not regulation — that's taxation.' The DA is seeking to have the VAT hike declared unlawful and halted before implementation.
Eyewitness News
22-04-2025
- Business
- Eyewitness News
As DA readies for VAT court challenge, it insists that hike is anti-poor
JOHANNESBURG - As the Democratic Alliance (DA) prepares to make its submissions for an application in the Western Cape High Court to stop the value-added tax (VAT) increase, it remains emphatic that the hike is anti-poor. The court will on Tuesday morning hear oral arguments on the DA and Economic Freedom Fighters (EFF)'s application to interdict the implementation of a 0.5 percentage point increase to value-added tax. Both parties allege there were some violations in parliamentary procedures during the passing of the fiscal framework, which includes a VAT hike. However, Finance Minister Enoch Godongwana filed an opposing affidavit disputing this, saying the increase will come into effect on 1 May. The DA's Mark Burke spoke outside court on Tuesday morning. "That will lead to further poverty as a result of taking money from people who can't afford it and giving it to people who don't know what to do with it. We are opposed to a bulldozing budget that will lead to more South Africans wondering why their house values have gone down for another year in a row. We are opposed to a bullying budget that will force young people to realise they will be poorer than their parents." Burke said that while the DA was confident of winning the legal fight, he said that stopping any VAT increase would require political will from all represented parties in Parliament. "We realise a court victory alone will not bring the change that we need. In the end, politicians will have to pierce their pipe dream plans and their outdated ideology has to go and confront the problem facing South Africans on the ability to afford to live. I ask whoever is making the decisions at the ANC, under whatever Soviet sand they have stuck themselves into, to simply answer this: How many ears does one party need to hear our people crying and how many times can you just turn your head away pretending you can't see?"
