Trick or Treat? ActionSA and Bosa may have signed political death wish if VAT increase goes through

With only a few days before the 0.5% proposed Value-Added Tax (VAT) increase kicks in on May 1, ActionSA leader, Herman Mashaba believes the proposed hike can still be reversed.

Earlier this month, the ANC ensured that the proposed hike would be included in the 2025 fiscal framework. The party received help from ActionSA, Build One South Africa (Bosa) and Rise Mzansi.

However, the ANC’s biggest government of national unity (GNU) partner, the DA, has approached the Western Cape High Court to interdict the implementation of the VAT increase. The party claims this increase will negatively affect the poor and lead to economic stagnation.  

Banks, retailers, and other businesses have already started to prepare for the increase, leading some analysts to believe that the ANC may have tricked smaller parties into getting their way.

Can the VAT be reversed?

Political analyst Sanet Solomon said the possible reversal of VAT is unlikely, given that the budget has already been passed.

“It is possible that they [smaller parties] were made to believe that the reversal of VAT was possible when it wasn’t.

“They should have done the necessary diligence to ensure that that could be the case instead of taking the ANC’s word for it. Not knowing is not sufficient given the impact this would have on people’s livelihoods,” she said.

On Tuesday, MoneyWeb reported that the finance minister denied that he suggested he could revoke the implementation of the increase in the value-added tax (Vat) rate from 15% to 15.5%.

In his answering affidavit to the urgent application by the DA and Economic Freedom Fighters (EFF), the minister also denies that he misled the public.

Parties could get punished

Solomon said the parties that helped push through the budget will likely be punished at the polls when the increase goes ahead.

“It is likely that voters would seek alternative political homes during the 2026 local government elections, as those parties voted against their needs, thus increasing the cost of living, which puts more strain on their quality of life.

“Parties like the EFF and MK would become more attractive options. This is particularly true of the MK party, which has done well in recent by-elections around the country,” she said.

Smaller parties optimistic of a “reversal”

VAT ‘will be reversed’?

Despite this, Mashaba told The Citizen he was optimistic of a VAT reversal. This is a change in tone after previously advocating for the increase to be removed from the budget framework before it was implemented on 1 May.

“What we wanted from the ANC is that this matter must be referred to the minister of finance and the Treasury. We said we would give them proposals on how to reverse VAT, which is a deal that we gave them.

“And we are meeting them on Wednesday so that they can tell us how far they are,” he said.

Rise Mzansi Chief Whip Makashule Gana expressed confidence that any increase could still be reversed.

“The VAT can still be adjusted after 1 May through appropriate parliamentary processes. We remain confident that the current increase in VAT will be a temporary measure as we have submitted alternative proposals,” he said.

Gana said it is normal for political parties to be criticised for their decisions. However, he said the focus is to serve the South African population through their power in the legislature.

“We will continue to work with the minister of finance to identify revenue sources and reduce the VAT rate to 15%,” he said.

The Citizen had sent questions to Bosa leader Mmusi Maimane. However, he had not responded to them at the time this article was published.

Mashaba and Gana’s comments come just weeks after ANC secretary-general, Fikile Mbalula, said any VAT increase could be removed at any time.

“As our economic situation is perfected, the intervention [VAT increase] will be withdrawn.”

ALSO READ: ‘ANC has chosen to push this VAT increase down the throats of South Africans’

Last-minute meeting between alliance partners

Speaking outside the Cathedral of Christ the King in Johannesburg on Wednesday, Mbalula confirmed that the ANC will meet with political parties that helped them pass the budget.

“There has been a lot of distortion about political parties’ positions on the VAT increase, and they will speak for themselves today or tomorrow on the outcomes.

“We look forward to making a major announcement and breakthrough,” he said.

Preventing a government collapse

Mashaba said another motivating factor for voting for the ANC’s budget was to ensure that the government does not collapse.

“We have been clear that we will not allow the DA to blackmail the ANC and compromise the budget and the country for nefarious reasons.

“The DA wanted the ANC to reverse all legislation and policies that favour the advancement of our people. Since when did they start caring about the black poor?” questioned Mashaba.

Meanwhile, DA spokesperson for Finance Dr Mark Burke dismissed claims that the party was blackmailing the ANC and playing politics with the budget.

“The ANC has chosen to push this VAT increase down the throats of South Africans, and it has sought support outside of the partnership. If we’re criticised for protecting South Africans from a VAT increase that is anti-poor and potentially unconstitutional, then that is a critique we’re happy to bear,” he said.

Changes in the GNU

Following the fallout with the DA, some ANC leaders proposed reconfiguring the GNU.

The Citizen understands that parties such as ActionSA are earmarked to be included within the GNU under such a restructuring.

However, Mashaba said only once VAT had been scrapped or reversed, ActionSA would begin engagements on a new coalition arrangement with its own terms of reference.

“If the GNU collapses, ActionSA will not enter into this arrangement. We will enter into a new arrangement with a proper, predetermined, legal agreement regulating how we co-govern.”

He said that if ActionSA’s proposal is not honoured, the party would not enter into a coalition arrangement with the ANC.

ALSO READ: NHI and VAT: What the DA demanded in budget talks