Political parties are expected to fiercely compete for credit over which of them are responsible for the National Treasury’s decision to withdraw the 0.5 percent VAT increase initially presented in the Fiscal Framework adapted during a heated debate and vote in parliament last month.
The treasury announced on Thursday morning that it had withdrawn the proposed VAT hike undertaking to cover the budget shortfall of R75 billion by among others reviewing expenditure.
“The Minister of Finance will shortly introduce the Rates and Monetary Amounts and the Amendment of Revenue Laws Bill (Rates Bill), which proposes to maintain the Value-Added Tax (VAT) rate at 15 per cent from 1 May 2025, instead of the proposed increase to VAT announced in the Budget in March.
The decision to forgo the increase follows extensive consultations with political parties, and careful consideration of the recommendations of the parliamentary committees,” said National Treasury in a statement.
Action SA was instrumental in the adoption of the Fiscal Framework tabling proposals reprioritised spending and the party was first to spring into action following the announcement by treasury.
“We have been vindicated! For weeks, ActionSA has been called all sorts of unsavoury names. All the while, we maintained our integrity and stance that THERE WILL BE NO VAT INCREASE,” said Action SA in a statement.
The EFF meanwhile has accused Finance Minister Enoch Godongwana and the National Treasury of incompetence.
The party said the budget was not going to achieve much for the majority of South Africans and if anything it could possibly lead to economic collapse.
“The EFF maintains that the 2025 Budget, tabled first on 16 February and again on 12 March 2025, which contained a 2 percentage point VAT increase later revised down to 0.5%, mainly to achieve a primary budget surplus, fails to appreciate the degree and depth of the economic crisis South Africa is confronted with. The budget failed to respond decisively to the crisis of unemployment and poor economic growth that now threatens a national economic collapse,” reads the EFF statement.
The party said Godongwana and those around him should fall on their swords.
“Furthermore, the EFF calls for the immediate resignation of the Minister of Finance and the Director-General of the National Treasury. This entire budget fiasco should be a reflection for the Minister of Finance and his Director General that they are out of depth and pose a threat to the economic stability of the country and, by consequence, are a threat to the livelihoods of South Africans,” said the EFF.
The DA also jumped in claiming a meeting it held with Godongwana at his request had led to the withdrawal of the VAT hike as the minister feared losing to the party in the Western Cape High Court.
“ The DA can confirm reports that lawyers acting for the Minister of Finance have approached our lawyers proposing an out-of-court settlement, in the matter the DA brought to interdict the VAT increase scheduled for May 1. The DA awaits a formal written settlement offer before responding to the Minister’s request. We will update the public on developments in due course. We can also confirm that a DA delegation is due to meet a high-level ANC delegation tomorrow, at which these discussions will be taken further,” said the DA in a statement.