South Africans will be poorer, future of government at risk - DA

Parliament has the power to amend the budget tabled by finance minister Enoch Godongwana on Wednesday.

This is according to Council for the Advancement of the SA Constitution director Lawson Naidoo who added that now that parties had some breathing room to find each other.

Godongwana’s 0.5 percentage points increase will be implemented in the 2025/26 and 2026/27 financial years.

A key member of the government of national unity said it would not support the budget, creating uncertainty about who will vote for it.

The DA said it would not support any increase in taxes, unless those increases were temporary and the ANC agreed to a series of major reforms that would 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,” said DA leader John Steenhuisen.

“As a consequence, the people of South Africa will be poorer, and the future of the government is at risk.”

Social Research Foundation director Frans Cronje said it was unclear how the impasse would end.

“This is quite a standoff and I think in the early days of the GNU [] the partners didn’t really employ their relative power …. They’ve started to do that now,” he said.

Build One SA acting spokesperson Roger Solomons described the VAT increase as a punch in the gut for citizens.

He said working families will pay more in tax on at least two fronts to foot the bill for the government’s unjustifiable choices. 

“Not only will VAT increase by 0.5 percentage points each year for the next two years, but there will be no inflationary adjustments to personal income tax brackets, rebates and medical tax credits this year. By next year VAT will be 16%, and we are now at the peak pressure point of taxing citizens,” Solomons said. 

ActionSA said that while VAT may be the most efficient of the major taxes, it harms the poor.

The party’s Alan Beesley MP said: “At the same time, the refusal to adjust tax brackets for inflation amounts to a stealth tax, pushing ordinary workers into higher tax brackets without an actual salary increase. The result? South Africans are expected to pay an additional R18bn simply to bankroll government waste, failed policies, and corruption.”  

Rise Mzansi leader Songezo Zibi said his party was pleased VAT did not increase by two percentage points “because it potentially could have a devastating impact on the poorest South Africans”.

EFF leader Julius Malema said the government had run out of ideas on how to generate revenue.

“We will not support any form of VAT increase. Let’s test the rich, let corporate tax be increased,” he said.

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