The ANC-DA-led Government of National Unity (GNU) is at risk of fracturing as tensions rise over the proposed 0.5% Value Added Tax (VAT) increase.
With the April deadline approaching, the Democratic Alliance (DA) has reportedly written to President Cyril Ramaphosa, agreeing to the tax hike only if the ANC scraps the Expropriation Act.
However, the ANC has remained firm, refusing to allow the DA to influence key economic policies.
Political analysts suggest that the ANC is unlikely to concede to the DA’s demands, a stance that could push either party to exit the GNU and seek alternative alliances.
Finance Minister Enoch Godongwana, addressing a parliamentary finance committee, acknowledged that the DA’s proposal extended beyond budgetary matters, but urged Parliament to focus on ensuring budget efficiency rather than introducing unrelated conditions.
The VAT increase has been met with strong resistance, particularly from opposition parties that argue it would disproportionately impact low-income households.
While the DA has been negotiating with the ANC on broader economic reforms, it has also called for a structured plan to reduce taxes over the next three years.
The party has expressed frustration over what it perceives as the finance minister’s bad faith approach, accusing him of discussing negotiations publicly rather than within established channels.
ANC Secretary-General Fikile Mbalula neither confirmed nor denied the existence of the DA’s letter, stating that discussions on the budget were ongoing at the parliamentary level.
He also highlighted that the ANC had initially considered a 2% VAT increase but had settled on 0.5% after negotiations.
This is not the first time the DA has formally raised concerns with Ramaphosa. The party had previously objected to Gauteng Premier Panyaza Lesufi’s alleged defiance of national directives, claiming it was being prevented from fully participating in governance.
Initially, the DA had strongly opposed any VAT increase unless it was temporary, warning that it could deepen economic inequalities. With tensions escalating, the party has now indicated that it will not support the proposed tax hike in the upcoming vote.
In response, the ANC has begun seeking support from opposition parties outside the GNU to secure the budget’s approval.
However, several parties including the MK Party, ActionSA, the Economic Freedom Fighters (EFF), and Build One South Africa (BOSA), B have made it clear that they will not support any increase in VAT.
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