The gloves are off between the ANC and the DA ahead of a new round of talks over the passing of the budget in parliament following its presentation by finance minister Enoch Godongwana this week.
Godongwana tabled the budget in the National Assembly on Wednesday in which he hiked VAT by half a percentage point from May 1 this year while he pencilled in a similar margin for April 2016 which will cumulatively raise VAT to 16% in two years, despite opposition from the DA.
The DA and the ANC are the biggest partners in the government of national unity (GNU) and the ANC needs the blue party’s support to secure at least a 50 plus one vote to get its VAT hike proposal approved by parliament.
But DA MPs have told TimesLIVE Premium the party would in the coming weeks, as parliament’s standing committee on finance processes the proposed VAT hikes, be hardening its attitude as they were growing tired of being ignored by the ANC.
This comes after the ANC, through President Cyril Ramaphosa, snubbed budget proposals that DA leader John Steenhuisen submitted to him in the days leading to Godongwana’s presentation of the budget.
Among others, the DA in exchange for their support for Godongwana’s budget with a VAT hike, wanted amendments to the Expropriation Act and the concessioning of the Cape Town port and Richards Bay harbour by September 2025.
But Ramaphosa and Godongwana rejected that, arguing those matters had nothing to do with the budget.
However, this has not sat well with top figures in the DA, who said the ANC’s now “pushed the price higher”.
They spoke on condition of anonymity after Steenhuisen took the party’s parliamentary caucus into confidence on developments that unfolded ahead of the budget on Wednesday.
“The price has gone up. There were engagements over this issue and the ANC did not want to find constructive compromise over this issue. And he [Steenhuisen] made it clear that the price is going up, no doubt. We’ll insist on more. They’ve opened a Pandora’s box. They’ve undermined the Treasury and cabinet by introducing a budget that does not have majority support and for that reason the price is going up,” said one of the senior party MPs.
“They’ve tabled a VAT that the public does not want. It’s the ANC that’s politicising the budget; they go and brief the top 7 on these issues.
“They go and get ANC to sign off and they think that’s the end of the process, that’s no longer the case, the game has changed.”
Intense discussions are expected to take place at the SCOF [Standing Committee on Finance] in the next 16 days as it begins to process the bills providing for the VAT hike, starting today when Godongwana and his team appear before their oversight committee.
In terms of the law, the finance committee has, from the day of budget tabling, 16 days to deliberate on proposed tax hikes before presenting its report before the National Assembly for approval by way of a majority vote.
All dominant parties in parliament are represented in the SCOF on a proportional basis and the tone of deliberations will be a significant indicator of how they would vote on the floor of the House once the report is presented.
Thus far, the DA, EFF, and MK Party are among the dominant parties opposed to a VAT hike and the ANC is poised to struggle to get the increase over the line without their support.
The three parties have a combined 184 votes while the ANC has its own 159 votes and it is relying on the support of other smaller parties.
But the smaller parties are themselves split on the VAT hike. The Freedom Front Plus and Action SA (with six votes each) are opposed to tax hikes.
Should parliament not approve the VAT hike by May 1, it would still be implemented by the government but only valid for 12 month in terms of the VAT Act.
While the DA seems intent on tightening the screws on the ANC, the former governing party is also making plans to lobby for support from the two dominant parties outside the GNU, the MK Party and the EFF.
The ANC believes it can convince Julius Malema to forgo his attitude towards the VAT increase. While the ANC understands it has no option but to negotiate with both the DA and the EFF, some within the party are reluctant to include Malema’s EFF in the GNU.
Some ANC leaders believe the inclusion of the EFF will be detrimental to the ANC and its international standing, while some in the ANC believe the DA should be thrown out of the GNU.
Those standing against the EFF argue that the ANC would be giving more ammunition to US President Donald Trump's administration to take more punitive action against South Africa.
However, those who say the EFF can be included in the GNU argue that while Malema can be unpredictable, he enjoys the same constituencies as the ANC and believes in the ANC’s transformation agenda.
However, Malema has so far shown no signs that the EFF would be willing to negotiate with the ANC.
“There is another perspective that we may not need both the DA and the EFF. Why would we not look to other parties including ActionSA to pass the budget? If you calculate the GNU without the DA and you include ActionSA we would still have the numbers we need in parliament,” the ANC leader said, adding that the ActionSA had previously expressed interest in working with the GNU.
However, ActionSA has rejected the proposed budget.
ActionSA MP Alan Beesley said this week that VAT may be the most efficient of the major taxes, but it disproportionately harms the poor.
“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,” Beesley said in a statement.
But the ANC leader said the EFF would create an even worse impression about the GNU making ActionSA the best alternative.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.