As Finance Minister Enoch Godongwana prepares to present the 2025 budget next month, tensions within South Africa’s Government of National Unity (GNU) have surged.
Parties are rallying to submit their proposals, each grappling with the implications of a contentious 2% increase in Value Added Tax (VAT) that has emerged as a major sticking point.
The Cabinet has dispatched Godongwana back to the drawing board following the GNU partners’ inability to reach a consensus on the budget.
With the DA threatening to withhold their support unless their proposals are taken seriously, the ramifications of the upcoming budget have never been more significant.
Freedom Front Plus’ chief whip Wouter Wessels expressed concerns over the nation’s budget deficit, urging the importance of economic growth.
“We have to get economic growth so that we can get the unemployed into employment and lessen the burden on the government,” he said, emphasising the need for both policy certainty and infrastructure delivery.
Wessels also called for improved fiscal discipline, highlighting the necessity to cut unnecessary expenditures.
“The government often procures goods and services at inflated prices. If ministers start travelling economy class, we could save billions. We can’t expect ordinary people to shoulder the financial burden. At the same time, government still indulges in luxury,” he said, adding that rampant corruption was a crucial concern that must be tackled to regain public trust.
GOOD Party secretary-general Brett Herron condemned the proposed VAT hike as “absurd”, saying it would collect a mere R58 billion in additional revenue.
“We need to reduce the tax gap, including illicit financial flows,” Herron stated, advocating for a wealth tax targeting South Africa’s elite to help fund a basic income grant.
Herron said increasing the tax burden on the working and middle-class was not an option and the top 1% of South Africa owns approximately 55% of the nation’s wealth.
He urged government to adopt a zero-budget approach and make judicious choices about expenditure.
DA national spokesperson Willie Aucamp articulated his party’s intentions to persuade Godongwana away from tax increases altogether.
“We can cut spending and that is what the DA has proposed. We want a pro-growth budget,” he said.
Aucamp said stimulating the economy and encouraging private sector involvement in infrastructure projects would ease the burden on government finances.
“People want jobs, not just grants. Grants are only a temporary solution,” he said on the critical need for job creation in light of ongoing economic challenges.
As the DA anticipates a pro-growth budget from Godongwana on March 12, Aucamp expressed hope that the ANC will embrace the notion of collaboration rather than governance alone.
“We hope and believe that realisation will sink with the ANC and they will definitely come to the table to listen and implement sound proposals the DA as partner in the GNU has put forward,” he said.