ANC in ongoing discussions to resolve Budget stumbling blocks

The ANC has initiated a series of meetings with smaller parties to address the ongoing budget impasse in South Africa with the aim of finding a solution to the country's fiscal crisis, which has sparked concerns about the stability of the Government of National Unity (GNU).

Last week two parties, the DA and the Freedom Front Plus voted against the ANC's budget proposal in the National Assembly, which included a VAT hike, but the ANC was able to pass the budget with the assistance of smaller parties in the GNU including Action SA and Build One South Africa (Bosa).

On Wednesday the ANC continued discussions with smaller parties, including the Pan Africanist Congress (PAC), Bosa, Al Jama'ah, and the Good Party, with Secretary-General Fikile Mbalula saying the discussions focusing on the adopted fiscal framework and its implications for national economic recovery and service delivery.

According to a statement released by the ANC the parties discussed various proposals regarding the VAT increase and the fiscal framework .

The PAC, led by its President Mzwanele Nyhontso told the ANC that it will continue to reject the VAT increase, suggesting alternatives such as rolling back VAT to 14% over three years, zero-rating essential goods and implementing progressive taxation for the wealthy.

“Yesterday (Wednesday), the PAC met with the ANC to present our proposals on the 2025/26 budget framework. We rejected the VAT increase but proposed alternatives. 

“(These include) zero-rating more essential goods, fighting public sector waste, progressive taxation for the wealthy and the ANC welcomed our input,” said Nyhontso, who is also the Minister of Land Reform and Rural Development.

BOSA president Mmusi Maimane said discussions with the ANC centred on the need for a sustainable and responsible budget, highlighting the importance of reversing the VAT increase and income tax bracket creep, reviewing government expenditure and adopting a national Growth Charter.

“We discussed how we can grow the economy and invest more on productive assets…we looked at the best ways to increase revenue by amending legislation that would make online gambling  and sports betting a sin tax that would accrue more revenue,” Maimane said.

The Good Party's Secretary-General Brett Herron proposed exploring alternative revenue sources to avoid raising VAT or increasing the tax burden on personal income.

"We believe the ANC is acting in good faith and is genuinely committed to finding alternative sources of revenue to avoid the proposed 0.5% VAT increase and the impact of personal income tax bracket creep," said Herron.

Mbalula, in a press briefing yesterday said his party had agreed to meet with other parties including the EFF and the UmKhonto WeSizwe Party in the coming days. 

Both parties have rejected the VAT increase saying that it will have devastating consequences for the majority of South Africans.

Political analyst Professor Ntsikilelo Breakfast emphasised the need for parties to work together to resolve the Budget impasse, saying: "SA does not have a long-standing history of coalitions, and so there will be some gaps in particular because of conflict management.

"It's normal where there are human beings, there are problems, but I think they have tried to move with speed to address those issues."

He said the main partners in the GNU have had issues over the Budget but were reluctant to sever their relationship.

"The evidence is glaring that the ANC has had a meeting and confirmed that they will not let go of the DA by themselves. On the other hand, the DA has also stated in public that they don't want to walk out of the GNU because that would have dire consequences for the country," said Breakfast.

“There will be a scope for some issues that need to be clarified in terms of how they continue with this partnership,” Breakfast said.

mashudu.sadike@inl.co.za