Cape Town – Finance Minister Enoch Godongwana may need to revise the national budget after opposition from parties controlling more than half of parliament’s seats.
The National Treasury proposed raising VAT by 1 percentage point by 2026, increasing levies on alcohol and tobacco, and not adjusting tax brackets for inflation.
While the African National Congress (ANC) and smaller parties supported the plan, the Democratic Alliance (DA), Economic Freedom Fighters (EFF), and others with 201 seats rejected it unless changes are made.
The DA, part of the ruling coalition, is demanding more action to boost economic growth and a comprehensive spending review.
Godongwana has indicated he’s open to concessions but noted the disagreements need political resolution.
He criticised the DA for using the budget to leverage political gains, particularly following recent losses on issues like land expropriation.
The budget will undergo further scrutiny by parliamentary committees and debates before a May vote, Daily Investor reported.
While the DA is seeking compromises, it is unlikely to leave the coalition, which minimises the risk to government stability, according to Amaka Anku of Eurasia Group, the report said.
“While the DA is using the budget process as leverage to extract concessions, it currently has no intention of leaving the government.
“That limits the threat to the stability of the government,” the report quoted Amaka Anku, head of risk advisory service Eurasia Group’s Africa practice as saying.
Meanwhile, according to EWN, Godongwana defended his budget in Parliament on Friday, urging MPs to stay focused on benefiting vulnerable communities despite criticism over the proposed VAT increase.
Speaking to a joint meeting of the appropriations and finance committees, Godongwana emphasised the budget’s pro-poor nature, highlighting an increase in social grants and a smaller VAT hike.
“The health budget is so eroded that accruals amount to R21 billion. If all of us here as honourable members, we care about these poor communities whose services have been eroded, it’s going to be important that irrespective of where we stand on a number of things, we keep our eyes on the ball,” said the the minister, as per the report.
However, the DA remains unconvinced, accusing Godongwana of disregarding National Treasury’s advice on the VAT increase, the report said.
