South Africa’s budget proposal on raising Value Added Tax (VAT) as recently presented by the Minister of Finance, Enoch Godongwana might not see the light of day due to lack of support from the DA and the EFF.
The budget has been referred to parliamentary committees for deliberation and scrutiny before the two Houses of Parliament pass or reject it on April 2 and the ANC will need the support of at least 50% of MPs to get the budget passed.
Godongwana had proposed during his budget speech last week that VAT be increased by 0.5% this year and again the following year, taking it up to 16% but parties have expressed dissatisfaction with its current form.
DA leader John Steenhuisen indicated that his party will not support the national budget and any increase in the VAT unless they get an indication that it is a temporary measure.
Steenhuisen said the ANC refused to agree to the reforms that would grow the economy, create jobs, reduce waste, and bring down taxes within three years.
“The ANC VAT budget doesn’t have a majority, and the DA won’t give it one. It is now up to the ANC to fix the mess it has created.”
DA spokesperson Hlumelo Jubase said the party has made it clear to its GNU partner, the ANC, that it is opposed to any VAT hike.
“We have made it clear to the ANC in the GNU that we would not support any increase in taxes, unless those increases were temporary, and the ANC agrees to a series of major reforms that will grow the economy, create jobs, reduce waste and bring down taxes within three years.
“The ANC refused to agree to these measures, and instead insisted on two likely permanent VAT increases, which cumulatively will increase VAT by 1% over the next two years. As a consequence, the people of South Africa will be poorer, and the future of the government is at risk,” said Jubase.
Both the EFF and MK Party want amendments to the budget.
“The EFF calls on all MPs and opposition parties to engage in collective and necessary bilateral engagements across the party lines, utilising the Money Bills Amendment Procedures and Related Matters Act, 2009 to amend the proposed fiscal framework and revenue proposals contained in the budget,” the party said in a statement.
A senior EFF member, who did not want to be named, said that the party would reject the proposal to increase VAT.
“I am not sure what is going to happen, but we are on record as saying we reject any VAT hike even though we have said we are willing to engage the ANC on this matter.”
“We agree with the commissioner of SARS that increasing VAT will not lead to any sustainable or significant increase in revenue but will only put poor and working households under more pressure to protect the white monopoly capitalist establishment,” the EFF leader said.
On Friday, the MK Party’s Des van Rooyen said: “We are more than ready to introduce amendments to this proposed Budget.”
Last week ANC Secretary General Fikile Mbalula accused the DA of driving an anti-transformation agenda while protecting white monopoly capital.
“We will not be deterred by those who wish to see South Africa return to the ‘good old days’ of apartheid economic privilege. As expected, the DA has once again revealed its anti-transformation agenda by opposing this progressive budget proposal.
“The DA seeks to use the budget process as leverage to renegotiate its role within the GNU, not because it has the interests of the people at heart, but because it is determined to advance an agenda that prioritises privilege over progress,” he said.
