By Lehlohonolo Lehana.
Photo Credit: Deaan Vivier.
ActionSA says Finance Minister Enoch Godongwana can gazette legislation for the proposed VAT hike of 0.5 percentage points to be postponed or not implemented.
Parliament voted 194 to 182 to adopt the 2025 fiscal framework report, which was approved by the Standing Committee on Finance without any amendments earlier this week.
Contrary to political parties’ claims that the VAT hike had been removed or ended, Finance minister Enoch Godongwana has confirmed that it remains part of the budget.
On Tuesday (1 April), the standing committee shot down proposals to formally amend the budget, which would have forced the matter back to the National Treasury for consideration.
Instead, the African National Congress (ANC) and Inkatha Freedom Party (IFP) committee members supported ActionSA’s non-binding “recommendation” to scrap the VAT hike and non-adjustment of tax brackets but not amend the budget.
According to ActionSA caucus leader Trollip said, the recommendations from a committee report “should” be binding.
Trollip said that the ANC approached the party after side-stepping negotiations with its largest Government of National Unity (GNU) partner, the Democratic Alliance (DA).
He said that the ANC told the party it could not redo the whole budget because it would take too long, and there was already too much uncertainty in the market.
ActionSA said it would support the fiscal framework in the committee on condition that its recommendations be accepted—to which the ANC agreed.
The recommendation said that the framework was accepted on condition that National Treasury find alternatives to the VAT hike and non-adjustment of tax brackets over the next 30 days.
It made no proposals on how this should be done.
Trollip admitted that there was much speculation about whether the recommendation was binding, saying it was an unprecedented move and open to interpretation.
He said that the party believes that recommendations adopted by a committee and then adopted by parliament should be binding.
However, he would not be drawn into saying whether the recommendation was actually legally binding.He also conceded that as soon as Godongwana tabled the budget and the VAT increase in March, the VAT hike would come into effect on May 1.
This would have been the case even if the parties opposed to the VAT hike had managed to send the budget back to be reworked.
Trollip said that the coming days would be crucial for parties to continue engaging to find alternative revenue proposals before it gets down to the business of scrutinising the money bills.