Finance Minister Godongwana distances himself from VAT hike amid GNU tensions! As political tensions deepen within the Government of National Unity (GNU), Finance Minister Enoch Godongwana has distanced himself from the controversial 0.5% VAT increase, stating that any reversal of the decision lies firmly with Parliament. His remarks come amid growing backlash from coalition partners and mounting pressure to reconsider the unpopular measure.
“Not Married to the Percentage”
Speaking in an interview with Newzroom Afrika during President Cyril Ramaphosa’s service delivery oversight visit to the Eastern Cape, Godongwana clarified his position on the VAT hike.
“I’m not married to any percentages or any increase,” he said, stressing that the original budget he proposed did not include a VAT increase and is still available as an alternative option.
Finance Minister Godongwana
The service delivery visit, led by Ramaphosa and attended by several Cabinet members, was aimed at assessing conditions in the Eastern Cape — one of the country’s most underdeveloped provinces.
Parliament Holds the Power
Godongwana reiterated that the decision to increase VAT is ultimately a policy matter for Parliament.
“If you remove the 0.5% VAT increase, you must find an equivalent amount on the expenditure side to ensure the fiscal framework remains balanced,” he explained.
He further clarified that the Public Finance Management Act (PFMA) and the VAT Act do not grant him authority to reverse the increase unilaterally.
“Parliament has the power to change it, once the necessary proposals are made,” he said.
Divisions Within the GNU
The VAT increase, set to take effect on May 1, has created serious rifts within the GNU. While the ANC-led government managed to pass the budget with the support of some smaller parties, both the Democratic Alliance (DA) and Freedom Front Plus (FF+), key partners in the GNU, voted against it.
Some ANC National Executive Committee (NEC) members have even suggested expelling the DA from the coalition, citing growing disagreements over economic policy.
Alternative Solutions Proposed
Parties such as ActionSA and Build One South Africa (BOSA), who supported the budget, have proposed alternative revenue-generation methods to help plug the budget deficit without resorting to higher VAT.
Godongwana confirmed he is awaiting formal communication from Parliament outlining these alternatives, emphasizing that any new proposals must maintain the integrity of the fiscal framework.
“Parliament’s resolution is that the parties must make proposals to me that do not undermine the fiscal framework but replace the revenue that would have been generated by the 0.5%,” he said.
Impact on Provinces and Social Spending
Addressing concerns about the potential impact on provincial budgets, Godongwana clarified that reversing the VAT increase would not necessarily result in immediate budget cuts.
“If you do away with the 0.5%, it doesn’t mean cuts — it means the increase will not be as big as initially projected,” he explained. “For example, social grants were set to increase by more than inflation. That increase may now be a decision that lies with Parliament.”
Pressure Mounts on the ANC
According to IOL News, the ANC is expected to abandon its push for the VAT increase due to the overwhelming opposition from coalition partners and other political parties.
Recent meetings between the ANC and the DA revealed a lack of consensus, with the DA remaining firm in its opposition to the hike despite “constructive” dialogue.
A senior ANC official involved in negotiations admitted, “If we are going to keep the GNU going and not alienate other organisations, it’s time we listen. We can’t go at it on our own.”
A Tense Path Forward
As the May 1 implementation date looms, the future of the VAT increase — and the stability of the GNU itself — remains uncertain. With the Finance Minister distancing himself and Parliament holding the reins, South Africa waits to see whether political compromise can be reached to avoid a deeper crisis.
