Finance Enoch Godongwana was forced to postpone his initial Budget Speech, which was meant to take place in February, with members of parliament taking issue with the proposed 2% Value Added Tax (VAT) increase.
Image: GCIS
In a chaotic budget vote marked by heckling and legal challenges, South Africa's political landscape faces uncertainty as parties clash over fiscal policies that could impact millions.
On Tuesday, passed the 2025/2026 Budget Fiscal Framework, with 194 MPs voting in favour and 182 voting against.
The adoption of the fiscal framework enables Parliament to proceed with the consideration of the remaining budget legislation.
1. Budget postponed in February
Finance Minister Enoch Godongwana announced on February 19 that the delivery of the 2025 national budget would be postponed indefinitely. The delay came after the cabinet was unable to reach a consensus on the proposed measures.
The Democratic Alliance (DA) pointed out that the holdup was largely due to its opposition to a suggested increase in VAT by 2 percentage points, bringing it to 17%.
2. VAT Increase
On Wednesday, after over a month the budget was postponed, political parties engaged in an intense marathon voting session where the African National Congress (ANC) successfully pushed its fiscal framework and revenue proposals essential for the national budget.
Some partners in the Government of National Unity (GNU) lent their support to the fiscal framework, which suggests an increase of 0.5% in value-added tax (VAT).
3. Parties rejecting the VAT increase
In a closely contested vote, the ANC secured a simple majority of 194 votes in favour against 182 opposed, despite backing support from the DA, one of the biggest partners in the GNU.
Parties such as the Economic Freedom Fighters (EFF), Umkhonto we Sizwe (MK) Party, Freedom Front Plus (FF+), African Christian Democratic Party (ACDP), National Coloured Congress (NCC), African Transformation Movement (ATM), as well as the United Africans Transformation (UAT) rejected the VAT increases.
4. ANC goes out of GNU for support
In a strategic move to enhance their numbers and secure a majority, the ANC sought support beyond the GNU, reaching out to ActionSA and Mmusi Maimane of Build One South Africa (BOSA).
ActionSA proved to be pivotal for the ANC, providing essential backing to pass the fiscal framework when negotiations with the DA reached an impasse.
With 159 votes from its own ranks, the ANC gained additional support from a variety of political parties, including the IFP, PA, UDM, Rise Mzansi, Al Jama-ah, the Good Party, and the PAC who are all GNU partners, along with several outside votes from ActionSA and BOSA that ultimately tipped the balance in favor of the ANC.
ActionSA celebrated a significant win after the vote, announcing that the proposed 0.5 percentage point VAT hike in the budget, along with the income tax bracket creep—which occurs when tax brackets fail to keep up with inflation—had been effectively eliminated.
5. DA heads to court to challenge the budget
The DA announced that it will be heading court to challenge the budget after the ANC managed to gather support for the budget to be passed in its approval as part of the GNU.
DA leader John Steenhuisen said how Parliament processed the VAT Budget was both unlawful and unconstitutional.
Steenhuisen slammed political parties who supported the budget saying they had just made it financially difficult for the citizens to afford.
Meanwhile, EFF leader Julius Malema said his party will be consulting its lawyers and an announcement will be whether they will take the process of Parliament to court.
sinenhlanhla.masilela@iol.co.za
IOL
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