Staying put: Finance Minister Enoch Godongwana is under pressure from some political parties to resign over the VAT drama and the national budget. (Dwayne Senior/Bloomberg via Getty Images)
Finance Minister Enoch Godongwana has defended his position in the wake of mounting calls for his resignation, saying that the decision about his future lies with President Cyril Ramaphosa.
“I serve at the pleasure of the president,” Godongwana told journalists this week, adding that the decision to reverse a hotly contested 0.5 percentage point VAT hike was a collective one made by the government of national unity.
“That decision does not lie with me, it lies with the president. I am mindful that the president has been participating in these processes and understands the nature of the challenges we have been experiencing in dealing with this problem.”
In an announcement shortly after midnight last week, the treasury said the VAT rate will remain at 15%, bringing to an end a two-month political battle over the unpopular tax.
Days later, the Western Cape high court also ruled against the VAT hike in an application brought by the Democratic Alliance (DA), with the Economic Freedom Fighters (EFF) being an intervening party.
Opposition parties, including uMkhonto weSizwe (MK) and the EFF, have pounced on the VAT U-turn, accusing Godongwana of fiscal mismanagement and demanding his removal from the cabinet.
Former ANC president Jacob Zuma’s MK party filed a motion of no confidence, denouncing Godongwana’s “regressive VAT hike” and arguing that “the finance ministry cannot be entrusted to individuals who disregard the socioeconomic realities faced by our people”.
The Red Berets’ leader, Julius Malema, on Monday signalled the party would back a no-confidence motion if one is introduced, calling for Godongwana and treasury director-general Duncan Pieterse to immediately resign because they have “proven themselves incapable of formulating a lawful, credible budget”.
On Wednesday, Godongwana insisted “I’m not going anywhere”, maintaining that South Africa’s fiscal strategy remains sound.
During a separate ANC media briefing the same day, party secretary general Fikile Mbalula defended Godongwana, saying he had not done anything wrong.
“Ministers resign for committing major things and I will ask a question, what did the minister finance commit?” he said.
“Except the fact that the proposals that he brought to the fore were disputed, particularly around the VAT increase, and if you were to debate the budget in totality you will realise that it is a good budget and the minister was able to go backwards and actually do the right thing in terms of the processes followed.”
Mbalula cautioned against a repeat of abrupt political decisions, referencing the “weekend special” reshuffles of ministers under Zuma.
“We’re not going to allow a situation where [ministers are removed overnight]. The president has the prerogative, but we are focused on stabilising the country and making informed decisions.”
Mbalula also criticised opposition parties and civil society groups who have pursued legal action over the budget, describing their response as premature and unnecessary.
“Facing a challenge like the budget should not immediately lead to calls for the minister to step down, that’s political posturing. Going to court was unnecessary, as these matters could have been settled out of court,” Mbalula said.
Regardless, Godongwana faces scrutiny, with the DA calling for the new budget not to impose additional burdens on South Africans already struggling with a rising cost of living.
ActionSA has not joined the chorus for Godongwana’s ouster, but has leveraged its parliamentary clout to reshape the budget.
Its leader, Herman Mashaba, had warned the party would withhold its support unless the VAT hike was scrapped. He noted that his party’s six parliamentary seats had helped pass the fiscal framework early in April, on condition that there was no VAT increase.
After the hike was reversed, ActionSA declared that its stance was vindicated, with Mashaba saying: “ActionSA rejected the budget as long as the VAT increase remained in place.” The party has also proposed R100 billion in alternative revenue measures.
Godongwana said there would be no increase in VAT or other taxes, noting that such measures had been dismissed because of their potential to hinder economic growth. He also ruled out additional borrowing.
“We will achieve a balanced budget through improved cost management. Further tax hikes would damage growth, reduce savings, and lead to job losses. Increasing borrowing would deepen our debt problem.”
He added that the country pays more than R1 billion daily to service its debt. “We have to operate more efficiently, scrutinise government expenditure, eliminate waste, and ensure every rand of public funds is used effectively.”
Behind the scenes, the VAT drama has exposed rifts in the ANC. Publicly, the party has rallied around the reversal, with Mbalula saying the decision was “rooted in the national interest” and driven by “moral clarity” to protect the working class.
He described the VAT spat as a “learning experience” that exposed flaws in the party’s consultation process.
“Godongwana will not be fired,” Mbalula said, because the minister has done his job, even as other ANC leaders have expressed unease about the episode.
Parliament is in limbo after Godongwana formally withdrew the appropriation and revenue bills he had tabled, promising new legislation once a revised plan is ready.
Portfolio committees have paused departmental hearings pending the new budget. Parties aligned with the ANC are instructing the treasury to conduct spending reviews to raise the R75 billion needed to fill the gap.