NHI and VAT: What the DA demanded in budget talks

The deadlock over the proposed budget continues, with the Presidency reportedly dismissing the DA’s latest demands.

The budget tabled by Finance Minister Enoch Godongwana will go before Parliament this week for a vote, with the ANC not having enough representatives to pass it alone.

This has led to several scrambled meetings over the last week and many more planned in the coming days.

While the ANC’s biggest government of national unity (GNU) coalition partner, the DA, has been a vocal critic of the current budget, it reportedly met with the Presidency on Friday with a new set of demands for its support.

According to the Sunday Times, these included:

•  The scrapping of import tariffs on manufactured goods;
•  Publication within two weeks of requests for information (RFIs) for the concessioning of freight rail lines and the ports of Cape Town and Richards Bay;
•  The scrapping of the ANC’s localisation policy;
•  Withdrawal of the draft regulations for the NHI Fund published in the Government Gazette this month;
•  Assurances that there would be no VAT increase after 2026;
•  Cabinet agreement on amendments to the Expropriation Act by April 17;
•  A spending review; and
•  An audit of ghost workers in the government, commencing on May 1.

Sources said the presidency was “not impressed” by the demands, which also seek a restructuring of economic policy by a committee of eight members, four of whom are from the DA.

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The VAT conundrum

The biggest sticking point of the current budget is the proposed rise in value-added tax (VAT) of 0.5% this year and the same next year. It was nearly universally rejected by opposition parties.

While the DA opposed it, Godongwana told parliament last week that it had agreed to accept the tax hike in exchange for scrapping the controversial Expropriation Act.

“The DA has sent a letter to the president accepting 0.5% in exchange for things that are outside the budget, like the Expropriation Act, and so on,” he told MPs.

It’s understood that another major GNU partner, the IFP, planned to reject the VAT hike. Still, it recently said it would accept it as a “temporary measure” until more suitable income streams become available.

How much is needed to pass the budget?

Of the 400 seats in parliament, the ANC holds 159, so it must find another 42 votes to pass the budget.

The DA holds 87 seats, and the IFP 17. The remaining GNU parties have only 22 seats.

Outside the coalition, the MK party holds 58 seats and the EFF 39.

Outside these top five parties, the remaining 13 parties in the National Assembly hold only 39 seats.

ALSO READ: Ramaphosa: ANC still shopping around for budget allies

The collapse of the GNU

The impasse has led to some reportedly calling for the DA to walk away from the GNU.

Speaking outside the ANC’s national executive committee (NEC) meeting at the Birchwood Conference Centre in Gauteng on Saturday, spokesperson Mahlengi Bhengu-Motsiri said the stalemate between the two largest parties would not collapse the coalition.

“It doesn’t spell the end of the relationship. We are not in this relationship because we want to, but because it is in the nation’s interest. We are not pronouncing on dissolving the GNU; that resolution will not come from us,” Bhengu-Motsiri said.

She said negotiations and discussions were underway, including with parties outside the GNU, and the ANC was “confident the budget will be passed”.

“Consensus is normal in a democracy. The GNU agreement does not say we cannot speak to other parties when we have shared views. This is a democratic process. Parliament has many parties.”

Additional reporting by Jarryd Westerdale

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