The majority of political parties in Parliament have rejected Finance Minister Enoch Godongwana’s 2025/2026 budget, mainly opposing the 0.5% VAT increase over two years.
Godongwana has tabled a budget that proposes a hefty tax increase on alcoholic beverages and tobacco-related products. He’s also announced a one percentage point Value Added Tax hike over two years. This, he says, is to raise R28 billion of much-needed revenue for this year.
While African National Congress (ANC) Chairperson Gwede Mantashe supports the budget, United Democratic Movement (UDM) Chief Whip Nqabayomzi Kwankwa and African Christian Democratic Party (ACDP) MP Steve Swart have voiced their opposition.
“The budget talks to the issues of our people. I heard the party that says this budget is not pro-growth. And I ask a simple question: how can you spend money on education, health infrastructure, social grants and say it’s against growth. We are effectively paying more tax to the fiscus. One of the issues that we are concerned about is how do you budget for a VAT over two years and the plan is intended to grow the South African economy.”
Swart adds, “It means there is no confidence in the plan that is being tabled here. Because the minister is making a number of projections around economic growth and also financing SARS, which is very important. So that they can be able to collect revenue. We do not support the VAT increase of one percent over two years. We believe there are other ways of saving money and collecting the revenue that is due to SARS. It’s R800 billion that is due to SARS.”
‘Compromised budget’
GOOD Party secretary general Brett Herron describes it as a compromised budget, a sentiment that the Congress of South African Trade Unions (Cosatu) ‘s Parliamentary coordinator Matthew Parks agrees with.
FF Plus MP Wouter Wessels attributed the budget to the political parties inside the GNU.
“It’s side of a compromised budget that is not an austerity budget which what we real afraid that it may be delivered. It had been brought to cut in order to balance the budget. So, overall, it’s a budget that we can live with and that we hope cushions the poor South Africans. It was a difficult one because we are 27% corporate taxed and other countries have actually gone below that to 23%.
“But we focused on two alternatives. We have R3 billion of taxes currently being owed to the state. VAT increase was in 2007 when the President was Jacob Zuma. Secondly, if it was not for the GNU, people would have today pay 2% more for their goods and services. So if it was not for the gnu in its success to have favoured consultation that now we are in a better position.”
Political divide over Budget
Government of National Unity (GNU) partner and Democratic Alliance (DA) leader John Steenhuisen has rejected the budget, calling it an “ANC budget.”
Meanwhile, MK Parliamentary leader Dr. John Hlophe argues that the VAT increase will disproportionately impact black South Africans.
‘Doesn’t inspire confidence’
ActionSA MP Athol Trollip says that under the current economy, the budget tabled does not inspire confidence.
“It’s clear it has reached too far for the ANC, and that is why we have not been able to reach the compromise budget. However, our door remains open. We are happy to keep the conversation going. But there has to be a realisation that this is a coalition. It’s not my way or your way. It requires a compromise. In our considered view as the MK Party, the minister had a number of options to explore.”
“But the option that the minister chose, in our view, is the wrong one. Increasing VAT by any percentage is disastrous. To increase it by 0.5% this year and next [year] who is going to suffer most … black people. I don’t want to talk about the fact that the economy can’t grow. The minister himself said that it has been stagnating for ten years. Because of that, we have so many people on social grants. That is the budget can’t balance. There was mentioning on cutting expenditure on the state-owned enterprises.”
