ANC-DA GNU on the brink? – Tensions soar over VAT hike & Expropriation Act showdown

Tax

Cape Town – The ANC-DA-led Government of National Unity (GNU) faces internal tensions over the proposed 0.5% Value Added Tax (VAT) increase as the April 1 deadline approaches, a report said on Friday.

According to IOL, the DA has reportedly sent a letter to President Cyril Ramaphosa, agreeing to the VAT hike only if the ANC scraps the Expropriation Act.

However, the ANC has resisted this demand, leading to speculation that the GNU could collapse, the report said. 

Finance Minister Enoch Godongwana confirmed the DA’s proposal but emphasized that discussions should remain within budget-related matters.

“The DA has sent a letter to the president accepting the 0.5 % VAT increase in exchange for certain things which are outside the budget, like the Expropriation Act and so forth.

Broader economic reforms 

“We are more than happy to interact with Parliament and discuss the modalities if there are any changes in the budget, provided those changes are confined to a debate about the budget,” the report quoted the minister as saying.

“We accept that the Parliament has got the authority to amend the budget, but we would plead that the focus is on how to make this budget efficient.”

The DA insists on broader economic reforms and lower taxes over the next three years.

ANC secretary-general Fikile Mbalula acknowledged ongoing budget negotiations but denied receiving a formal proposal from the DA.

Speaking at the party’s national executive committee (NEC) meeting in Boksburg on Friday, he did not deny the existence of a DA letter to the President outlining conditions for supporting the budget, SABC News reported.

Mbalula said that discussions would not be limited to the 0.5% VAT hike but would also consider spending adjustments.

The ANC is engaging opposition parties to secure budget approval, with the NEC meeting set to include a political overview by the President before focusing on the 2025 budget.

The VAT increase has faced widespread opposition, with parties like the MK Party, ActionSA, the EFF, and BOSA refusing to support it.
As a result, the ANC is now seeking alliances outside the GNU to pass the budget.
The DA has historically opposed VAT hikes, arguing they disproportionately impact low-income households.

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Compiled by Betha Madhomu

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