ANC to drop VAT hike? DA says meeting was ‘constructive’

Chairperson of the federal council of the DA, Helen Zille, says her party’s meeting with the ANC was “constructive”.

The two biggest parties in the ruling government of national unity (GNU) met on Saturday to iron out their differences over the national budget. At the heart of their disagreement is a value-added tax (VAT) increase that takes effect on 1 May.

Earlier this month, the National Assembly approved a report adopting the national budget.

On 2 April, 194 Members of Parliament (MPs) voted in favour of the Standing Committee on Finance’s report on the fiscal framework and revenue proposals, while 182 MPs opposed it.

ALSO READ: MK Party ‘no spare wheel for ANC to use’ in budget vote spat

However, several political parties have opposed the budget, with the DA having taken the matter to the Western Cape High Court.

The ANC has met with several parties to discuss the budget and find solutions to the impasse.

ANC and DA meeting ‘went well’

The two parties met on Saturday, with Zille leading the DA delegation.

Zille said the engagement was in a “constructive” atmosphere.

“Both sides spoke respectfully yet frankly about the need to resolve the impasse over the budget and to enhance cooperation between the two parties in the context of the Government of National Unity (GNU),” said Zille.

ALSO READ: Here’s why constitutional law expert says VAT hike should be postponed

“The DA reiterated our position that a VAT increase is unaffordable without meaningful reform that will increase economic growth and create jobs.

“The DA is committed to finding solutions in the best interests of the people of South Africa, both in relation to the budget and to strengthen the GNU.”

GNU reconfiguration

ANC spokesperson Mahlengi Bhengu said in the meeting that a reconfiguration of the GNU was discussed, where the party seeks to ‘reset’ relations.

Bhengu said the ANC’s door remained open to parties who still wished to speak to the party. The MK party has, however, rejected the ANC’s invitation.

“The reconfiguration of the GNU was discussed. We’re hitting the reset button, part of which is to have a stronger GNU, whoever is in it in the final analysis. Stronger GNU is governed by rules that work, certain protocols, ensuring a strong measure of accountability,” said Bhengu.

ALSO READ: National Assembly passes budget after heated debate

“The existing mechanism of the GNU being reassessed, including the GNU clearing house, establishing other mechanisms to strengthen the stability of the GNU, whoever is in that government.”

In a statement, the ANC called on parties to set political interests aside and prioritise South Africans.

“South Africa must come first. As leaders, we owe it to the people of this country to rise above narrow political interests and work together in the spirit of unity and shared progress.”

Way forward?

Bhengu said what happens next will be a result of the discussions the party held with political parties

“Whatever happens out of these negotiations will be an outcome of a consensus-seeking process,” said Bhengu.

A Sunday Times report claims the ANC is likely to drop its insistence on a VAT hike in this year’s budget amid opposition from other parties.

“The VAT thing, including even in the ANC and everybody else, is not going to pass. The increase in VAT is not going to pass. The minister of finance is under pressure now to … kick it into touch or take it out completely. That is where things are now,” a senior ANC leader reportedly told the publication.

ALSO READ: You could pay extra VAT for a year, but forget about a refund if hike is rejected

Another ANC leader, however, told the publication there was no “appetite” to relook the fiscal framework to remove the VAT increase.

“The VAT increase is going ahead. That train has left the station. The only people we are having a conversation about the reversal of this thing is ActionSA, everyone else has accepted that it’s going ahead,” the leader was quoted as saying.

EFF on ANC meeting

The EFF met with the ANC on Friday and used the meeting to reaffirm its rejection of the VAT increase.

“Our rejection of VAT hikes was exhibited by our vote against the adoption of the Standing Committee on Finance’s report in the National Assembly, which was a product of a flawed and irregular process now subject to judicial review,” said the party.

The party said that although it met with the ANC, it was under no impression that anything could be reversed and that any alternatives could be implemented before 1 May.

ALSO READ: VAT rate increase: Key considerations for businesses ahead of May 2025

“The EFF wants to make it categorically clear that we are under no illusion that there is any legislative possibility of reversing the VAT increases which were supported in the Fiscal Framework and Revenue Proposal by various political parties in the Standing Committee on Finance and subsequently, in the National Assembly,” said the party.

“Our engagements with the ANC must therefore not be mistaken as participation in a fruitless exercise to seek alternatives to the VAT increases within 30 days under the false hope that such alternatives will be implemented before 1 May 2025. This is simply not practical, realistic or legislatively permissible.”