President Cyril Ramaphosa and DA leader John Steenhuisen. (GCIS)
Members of the government of national unity (GNU) and opposition parties have expressed frustration over the protracted impasse between the ANC and the Democratic Alliance (DA) over the budget, describing it as a political deadlock that threatens governance if unresolved.
They say the deadlock also raises the possibility of a need for fresh elections if the budget fails to pass.
Finance Minister Enoch Godongwana will appear before the National Assembly on Wednesday to deliver his 2025 budget speech, which was postponed from 19 February after members of the 10-party governing coalition failed to agree on a two percentage point increase in VAT.
Discussions over the past two weeks to try to resolve the points of contention in the budget between the ANC and the DA, have reportedly not been successful.
President Cyril Ramaphosa put together the coalition government after the ANC failed to garner a parliamentary majority in last year’s general elections, managing just 40% of the vote.
Good party secretary general Brett Herron said they were worried that the impasse between the ANC and the DA was grounded on political posturing rather than addressing poor people’s living conditions.
“Attempts to table the 2025 budget have degenerated into political farce,” Herron said, adding that Good’s support for a proposed much lower 0.5 percentage VAT hike would depend on the broader budget provisions.
“The ANC wants to raise VAT to fund social spending, while the DA insists on reducing government waste before any tax increases. Neither approach fundamentally addresses inequality or poverty,” Herron said.
He suggested alternative revenue-generation strategies, such as reducing the tax-free retirement savings cap, rather than increasing VAT, which would affect all income groups.
Herron called for a budget overhaul within the next year and proposed a lekgotla to resolve disputes ahead of future fiscal planning.
United Democratic Movement leader Bantu Holomisa said although the impasse was visible, his party would vote in favour of the budget because the country could not afford further delays.
“We are waiting for the minister of finance to deliver his speech to the house, we cannot deal with any more postponements. The budget can be debated in parliament but we cannot afford postponements because people need to be paid,” he said.
The Sunday Times reported at the weekend that the clearing house set up last year to deal with disputes in the coalition government had agreed on a smaller VAT hike of which would possibly be followed by similar-sized hikes in the next two years. The publication added that Godongwana had proposed cutting social relief of distress grants — introduced during the Covid-19 pandemic — to avoid increasing VAT.
Last minute negotiations were expected on Tuesday night for the GNU partners to try to resolve their differences, with the DA continuing to argue against any increases to VAT.
Ramaphosa and DA leader John Steenhuisen, who is the minister of agriculture in the coalition, held talks on Monday morning in an effort to reach an agreement, with high-level discussions set to continue until Wednesday morning, when Godongwana will hear whether his proposals receive cabinet approval.
The DA has advocated for spending cuts, while treasury officials maintain that fiscal constraints require additional revenue.
“The fact of the matter is that we need this money and it has to come from somewhere, which is why SRD [social relief of distress] grants become the scapegoat. We have been saying for many years that these grants, including SOEs [state-owned entities], cause a fiscal deficit and cutting these will plug the revenue we need,” one treasury official said.
Another official said the finance department remains firm on maintaining the medium-term expenditure framework, but acknowledged that in a power-sharing arrangement, the fiscal strategy remains a point of contention.
Ahead of the Tuesday night meeting, a senior DA official said the party would not support a budget with tax increases, adding that negotiations were ongoing to determine an acceptable compromise.
“We are aware of the ANC’s strategy to set a deadline and run down the clock to force an outcome. However, with parliamentary approval required, the DA holds leverage in these
negotiations,” the party official familiar with the discussions said.
ANC secretary general Fikilie Mbalula told a media briefing on Monday that Godongwana had met party members to discuss the budget and that he was hopeful it would be successfully tabled on Wednesday.
“We support the minister and [we are] working with everybody, at the level of government and we are confident that it will produce a budget,” he said.
The ANC is said to have been looking to opposition parties outside the unity government, including Julius Malema’s Economic Freedom Fighters (EFF), for support in passing the budget should the DA refuse to do so. Although the EFF also opposes VAT increases, sources have said discussions with the ANC are ongoing.
But EFF national spokesperson Sinawo Thambo said the ANC had not approached the Red Berets about the budget, adding that the party was resolute about not supporting any proposed VAT increase.
He added that it would be disingenuous to threaten to decrease social relief of distress grants to avoid increasing VAT, as Godongwana is reported to have proposed
The DA’s spokesperson on finance, Mark Burke, said the party would stand its ground and not be bullied by the ANC’s plan to approach the EFF.
“The DA will continue to advocate for credible pro-growth, pro-jobs and actual alternatives that focus on efficiency and we have suggested that the best way to do this is by spending smarter and capacitating SARS, rather than raising taxes on a struggling economy,” he said.