By Daanyaal Matthews
Parliament has approved Finance Minister Enoch Godongwana’s budget proposals with 194 votes in favor and 182 against, following weeks of intense negotiations and speculation. ActionSA emerged as the deciding factor for the African National Congress (ANC), much to the frustration of the ANC’s Government of National Unity (GNU) partner, the Democratic Alliance (DA).
The rift between the ANC and DA on such a critical matter has fueled speculation that the GNU coalition may not last its full term. The DA is now set to hold an internal federal executive meeting to determine its next steps.
Speaking on VOC’s NewsBeat, Karabo Lerato Khakhau, a DA Member of Parliament, stated that her party opposed the budget in the interest of its constituents but had attempted to resolve differences with the ANC behind closed doors before taking a public stance.
“We have a Deputy Minister of Finance; his name is Ashor Sarupen. Ashor told the ANC, Godongwana, and the National Treasury that this is not going to work and to please consider his tabulation. They did not consider; in fact, they came to parliament without considering the DA’s position. Then Parliament told them to go back, they went back, and still we said, We are willing to negotiate; let us talk and sit at the table,” Khakhau argued.
She further accused the ANC of derailing GNU discussions by engaging in backroom negotiations with ActionSA, which she says led to a breakdown in communication between the ANC and DA.
“You would know that there has been a back and forth between the DA and the ANC to try and find each other. And, just as we were about to find each other, the ANC was deciding to have a conversation with ActionSA on the sideline, leaving our conversation on hold, and then they hung up on us on the call and continued to talk with ActionSA,” she contested.
The ANC, however, has countered these claims, stating that the DA set unreasonable conditions for passing the budget. The party alleges that the DA demanded amendments to the National Health Insurance (NHI) Act, Basic Education Laws Amendment (BELA) Act, and Expropriation Act before agreeing to vote in favor.
The ANC has likened these demands to holding the country “hostage.”
ANC National Spokesperson Mahlengi Bhengu-Motsiri explained that the DA had labeled the budget negotiations a “dealbreaker.”
“When we were negotiating matters related to the National Budget, the DA came with ultimatums to the ANC, and the DA threatened to leave the GNU and used words like ‘this is a deal breaker.’ And the ANC has never threatened anyone,” she stated.
Bhengu-Motsiri praised the parties that supported the ANC, arguing that they prioritized national interests over political agendas.
“We are grateful to the parties that decided to put South Africans first and the national interest first aside from party political interests. We are grateful for the fact that we have a fiscal framework that is undergoing several other consultations to make sure that we can, together as parties represented in Parliament, find possible other alternatives to the VAT increase,” she said.
Among those who backed the ANC was Al Jama-ah. Councillor Asghar Khan stated that while his party voted in favor of the budget, it did not support the VAT hike.
“The Al Jama-ah party takes its stance based on its policies and the needs of our constituents. Even in this instance of the VAT, on the 12th of March, when the Minister of Finance announced that there is a proposal of a 0.5% VAT increase, Al Jama-ah was one of the first parties to call for a reduction in VAT and an increase in turnover tax of all businesses. So, on fundamental aspects we have disagreed with the ANC, and we will continue to do so on a case-by-case basis,” Khan asserted.
A key factor in Al Jama-ah’s decision was ActionSA’s proposal to allow a 30-day window to explore alternative revenue sources.
“In terms of the fiscal framework proposed by ActionSA, it will then give the Government of National Unity 30 days, to the 1st of May, to reduce the VAT rate again. So, on the 1st of May, and we know there is misinformation going out that VAT is increasing immediately, no, until the 1st of May there is a cooling-off period, and in this cooling-off period this idea will be relooked at and the Finance Minister will come up with a framework that excludes the increase in VAT and the issue of the tax brackets for personal income tax,”Khan clarified.
However, the fiscal framework backed by ActionSA and its partners has faced criticism from both the DA and the Economic Freedom Fighters (EFF).
EFF MP Nazier Paulsen argued that ActionSA, by aligning with the ANC, effectively enabled the VAT increase.
“Once the fiscal framework is adopted by Parliament, there are no budget proposals that can come afterwards—you vote once, and that’s it. So, ActionSA obviously do not fully understand the budget process, so I think it’s a futile exercise to come up with proposals after—within the month—that they would revise the fiscal framework,” Paulsen stated.
The EFF maintains that VAT should never have been considered as a revenue source, advocating instead for higher corporate taxes. Paulsen argued that increasing corporate tax would have yielded significantly more revenue while also strengthening the South African Revenue Service (SARS).
“Had we increased the corporate income tax, we would have been able to generate more revenue, giving SARS more money to collect money from those that have been dodging paying taxes. It would have been an even better option. So, a 0.5% increase would bring in R29 billion to the fiscus, whereas if we were to go after those people who are earning more than a million rand and not paying tax and had we increased corporate income tax, we could have collected so much more,” he concluded.
With divisions deepening within the GNU, the coming weeks will be critical in determining the coalition’s future and the fate of South Africa’s economic policies.
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Photo: ParliamentTV
