By Lehlohonolo Lehana.
The African National Congress (ANC) hosted a joint media briefing with Inkatha Freedom Party (IFP), Action SA, Pan African Congress (PAC), Rise Mzansi, BOSA, United Democratic Movement, Good Party, Al-Jamah, Patriotic Alliance, parties that have constructively engaged in fiscal framework deliberations. The Democratic Alliance (DA) was conspicuously absent from the parties listed.
Finance Minister Enoch Godongwana confirmed in a statement on Thursday that the VAT rate will remain at 15%, shelving the proposed 0.5 percentage point hike which was set for the 1st of May.
Speaking at a joint press briefing on Thursday morning, the ANC’s Secretary General, Fikile Mbalula, said his party is in good spirits with the reversal of the VAT hike.
“We welcome, as the ANC, the statement of the treasury without disruption and instability because the interests of South Africans come first,” said Mbalula.
“Our views in these discussions were defending the expenditure side of the budget, in the interest of breaking the austerity cycle.”
Mbalula said that without the VAT increase, the presented budget was the best amongst other budgets ever presented.
“This budget addresses the question of growth in terms of the economy, it cushioned the poor in terms of investing in social expenditure, it cushioned us against austerity.”
The parties represented at the briefing all agreed that the DA’s court case did not influence the reversal of the VAT, adding that the party was claiming an undeserved and easy Victory.
The DA claimed credit for the VAT reversal, saying its legal team had presented a strong case against the flawed parliamentary process used to adopt the fiscal framework.
DA Federal chairperson Helen Zille said while the finance minister’s legal counsel had now approached the DA for an out-of-court settlement, the party would continue with the second part of its court challenge, which contests Godongwana’s powers under the VAT Act.
The Economic Freedom Fighters (EFF), which joined the DA in the court challenge, said the fiscal framework had been adopted “illegally through deceit and lies”, and called for the finance minister’s resignation.
Inkatha Freedom Party spokesperson Mkhuleko Hlengwa said the budget was a living document that must adapt to changing circumstances.
“The situation clearly shows that Sars has collected more money, and because of that, we are in a position to adjust the budget moving forward,” he said.
ActionSA leader Herman Mashaba accused some MPs of holding the budget hostage to score cheap political points and said his party had been targeted by a well-funded misinformation campaign falsely claiming it supported the VAT hike.
Patriotic Alliance deputy president Kenny Kunene accused the DA for exploiting the budget issue as leverage to push for the setting aside of the controversial NHI Act and the Bela Act, after failing to convince its partners in the coalition government to do so.
Rise Mzansi leader Songezo Zibi warned that the treasury’s role should not be compromised over the fallout.
“This process has been about freeing the finance minister from extortion. We can now proceed with the budget without debating legislation already passed by parliament,” he said.
Build One South Africa leader Mmusi Maimane said his party had supported the fiscal framework because it included a broader basket of essential services that would protect vulnerable South Africans.
The crisis is likely to further damage the ANC’s credibility, with opinion polls suggesting that its popularity is falling.
An opinion poll released earlier this month by the Institute of Race Relations put the party’s support at 29.7%, while a poll in February by the Social Research Foundation put it at 32%. Both had a margin of error of around 4%.
The foundation said a “significant chunk” of ANC voters were “so dissatisfied with the party and uncertain about their future voting intention” that they had become “free agents in South Africa’s voting market”.
In last year’s election, the ANC’s share of the vote slumped to 40%, from 58% in the 2019 poll.
The hike was also opposed by the biggest trade union federation, the Congress of South African Trade Union (Cosatu), which is in alliance with the ANC.