Democratic Alliance (DA) leader John Steenhuin claims the disagreements over a proposed 2% increase in Value-Added Tax (VAT), were among the reasons for the postponement of the 2025 Budget Speech.
Finance Minister Enoch Godongwana was set to deliver the speech at 2pm on Wednesday, but cracks within the Government of National Unity (GNU) led to an unprecedented delay.
The budget proposal included a VAT hike, which is meant to fund public sector wage increases, retain essential workers such as teachers and doctors, expand early childhood development programmes, and address the country’s retail infrastructure crisis.
The proposed VAT increase would have raised the rate to 17%, a measure that was widely rejected during an emergency Cabinet meeting held prior to the scheduled speech.
According to a leaked draft of Godongwana’s speech, the Treasury had argued that the increase was necessary to fund the wage bill for public servants and improve South Africa’s public services, including the rail system.
However, Cabinet Ministers, which included members of the GNU, from the DA, PA, IFP, FF+, PAC and others, could not find consensus on the issue.
Owing to that, the Budget Speech was postponed for the first time since 1994.
Speaking outside Parliament with the media, Steenhuisen explained that the DA was firmly opposed to the VAT increase, which it saw as regressive and harmful to South African households already struggling with the high cost of living.
“The Democratic Alliance felt that the budget in its current form did not speak sufficiently to growth and jobs, but instead was far too focused on cuts and taxes,” he said.
“A 2% increase in VAT would have been completely retrogressive. It would have meant even more burden on existing South Africans at home.”
Steenhuisen added that the DA would work with GNU partners to push for a budget that stimulates growth, creates jobs, and addresses poverty.
“We need more jobs, not more taxes,” he added, stressing that the blue party would not support a budget containing the VAT increase.
Cabinet spokesperson Khumbudzo Ntshavheni said the ministers needed more time to engage on the matter.
The revised Budget Speech will now be tabled on March 12, 2025, after consultations with the parties in President Cyril Ramaphosa's GNU.
Speaking during a press conference held after the Budget Speech was postponed, Godongwana acknowledged the difficulty of balancing the country’s financial needs and funding priorities.
"What we are grappling with is not necessarily the matter of 2%, given the challenges we face as a country, how do we fund them? Do we continue cutting expenditure?” he said, adding that Ramaphosa held the final authority on the budget’s direction.
While Ntshavheni shielded the ANC from direct responsibility for the VAT proposal, she noted that the Treasury’s role was to balance the national books, and the postponement was a collective decision by GNU ministers to allow for further discussion on the issue.
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