Latest news with #R60bn
TimesLIVE
17-05-2025
- Business
- TimesLIVE
Last chance budget to get green flag
Another insider said: 'There's happiness throughout. I don't know how he came up with this, I don't know how he made it [the budget] this good, but it just means it was doable from the start. He did his job.' This source said Godongwana was 'even working very well' with his DA deputy minister Ashor Sarupen. A fourth source said the spending cuts might have an even worse effect on poor people than a VAT increase would have had and predicted there would be 'long faces' in parliament. 'The amount of cuts or reductions is bigger than what VAT would have been had we left it,' this source said. The trade-off was that instead of increasing VAT, 'you will have to wait longer for your clinic, or you have to wait longer for us to fix this road, or you will have to wait for a train because we can't put in all the signalling equipment'. Godongwana's first budget included an additional R232.6bn over the medium-term expenditure framework to address spending pressures. One of the sources said the opposition to the VAT hikes meant Godongwana had no choice but to cut spending. 'So that's what parties have been doing since February,' this source said. 'In fact, what they said was 'we're not going to give you the means to spend an extra R232bn, we reject your proposal'. Then he came back in March with I think it was R179bn. 'The parties said 'we don't want to give you R179bn'. So, he is coming back now, and he is saying from the March version we are going to have to cut another R75bn.' Godongwana said last month scrapping the VAT hikes would result in a R75bn shortfall in his budget. To cover this, and in the absence of other revenue mechanisms, the minister is believed to have decided to slash expenditure by at least R60bn. 'Well, let's just say the tough choices finally have to be made,' one of the sources said, citing the International Monetary Fund's decision last month to cut its projection for GDP growth in South Africa this year from 1.5% to just 1%. 'We can't borrow more because revenue projections track GDP, so reducing the amount by which we add to the baseline [last October's medium-term budget] is the only option,' the source said.
TimesLIVE
24-04-2025
- Business
- TimesLIVE
DA claims victory as finance minister backtracks on VAT rate increase
The DA has declared victory, saying the reversal of the VAT hike was a result of its opposition to an increase in the tax. This after finance minister Enoch Godongwana dropped the 0.5 percentage point hike which would have come into effect on May 1. DA federal chair Helen Zille said the backdown followed sustained opposition by her party in the cabinet, in parliament and in court. 'From the outset, the DA has opposed this tax increase, highlighting its impact on already struggling South African households,' she said. The party challenged the process by filing an urgent application in the Western Cape high court to contest the constitutionality of the increase and procedural flaws in tabling it. 'This exposed the arbitrary power the minister of finance sought to wield in imposing the VAT hike. The approach by lawyers acting on behalf of the minister with a proposal for an out-of-court settlement to scrap VAT marks a critical turning point in this battle. It is now clear that the Treasury had no choice but to reverse its decision in the face of our relentless and strategic legal pressure,' said Zille. The DA believes Godongwana's backtracking places emphasis on their arguments made in their court application, which accused the minister of exercising unconstitutional powers to impose or withdraw VAT unilaterally. 'While this represents a significant step towards stopping the VAT hike, the process is not yet complete. A final court order and a pronouncement on the validity of the fiscal framework by the speaker must still follow,' said Zille. The DA revealed that it is awaiting a formal written settlement offer before responding to the minister's request, and 'will keep the public informed of developments'. 'Even Godongwana's own court papers confirmed the intention to proceed with the VAT hike, and it was only the real prospect of losing in court, thanks to the DA's exceptional legal team, that forced the Treasury into retreat.' Zille said the Treasury's retreat was not a reconsideration but 'a retreat born of necessity in the face of likely legal defeat'. Boasting that its legal action achieved the intended result, the DA said it had to stand firm to protect the public from the 'consequences of a tone-deaf and anti-poor budget'. 'At every turn — from the cabinet table to the courtroom — we held the line. This underscores the power of the DA to effect change in a new context where there is no longer a majority party.' Meanwhile, TimesLIVE reported last week that Godongwana 'responded positively' to a proposal to amend the estimated revenue in his fiscal framework and include a projection that Sars will collect between R20bn and R60bn from its debtors between now and December.
