While The Presidency says the ‘Cabinet input process into the Budget’ has been concluded …
With a week to go before Finance Minister Enoch Godongwana finally tables a reworked 2025 National Budget next Wednesday, Democratic Alliance (DA) leader John Steenhuisen has insisted there is no agreement yet on the budget between the main government of national unity (GNU) partners.
“Constructive discussions on the budget are ongoing. There is no agreement yet, but we are working towards a resolution by 12 March,” Steenhuisen said in a post on X on Tuesday.
His comments came after The Presidency issued a statement following a special cabinet meeting on Monday (3 March) to try to resolve the budget deadlock, which largely centres on the ANC and National Treasury pushing for some form of Vat (value-added tax) hike.
The most telling part of The Presidency statement was at the end, which read: “With the conclusion of the Cabinet input process into the Budget, the Minister of Finance and National Treasury are now set to finalise the budget and table it before parliament on the 12th of March 2025.”
In an unprecedented move, Godongwana had to call off his budget speech on 19 February after the cabinet and GNU partners did not agree on a controversial proposal to hike SA’s Vat rate by two percentage points, to 17%.
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The DA and other political parties have been vehemently opposed to a Vat hike or other major tax increase proposals, such as a wealth tax. However, the DA is the ANC’s main ‘partner’ in the GNU.
At the weekend, reports emerged that the ANC was talking to the EFF to try to push through a lower Vat increase of around 75 basis points. The EFF is not a partner in the GNU.
“A Special Meeting of the Cabinet was convened on Monday, 03 March 2025, to consider inputs by members of the Cabinet into best possible options, under the circumstances, to fund the Budget of 2025/26 financial year and the medium term,” The Presidency noted in its statement issued on Tuesday morning.
It said the latest meeting followed the special cabinet meeting on 24 February, which “allowed broad discussions on the country’s fiscal constraints and the need for rapid implementation of the three key priorities of the 7th administration under the GNU”.
“At the meeting of 24 February 2025, President Cyril Ramaphosa set up a team of Ministers led by Deputy President Paul Mashatile to work with the Minister of Finance and his National Treasury team to consolidate cabinet inputs for further consideration.
“The team … tabled a variety of options that were considered by Cabinet. In compliance with the provisions of Section 27 of the Public Finance Management Act (1 of 1999), Cabinet mandated the Minister of Finance to select from the discussed options and fund the Budget in a manner that takes into consideration [a] the fiscal constraints of the country, [b] mitigates the impact on the poor and middle-income households; and, [c] supports economic growth,” The Presidency added.
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Parliament set for ‘rough ride’
Institute for Economic Justice co-founder and senior policy specialist Neil Coleman said in a post on X that The Presidency’s statement “suggests there will be no Cabinet sign-off on the Budget, but that the Minister of Finance and Treasury have been given discretion to decide on the budget ‘options’, aiming to avoid a Cabinet standoff and deferring the debate to the House”.
“Prepare for a rough ride in Parliament,” Coleman commented.
Meanwhile, following weekend reports that the ANC was talking to the EFF, the DA’s spokesperson on finance Dr Mark Burke issued a statement declaring that the “DA stands firm on zero Vat increases regardless of [the] reckless ANC gamble”.
“It is a shame that the ANC is willing to risk SA’s economic stability in a desperate attempt to force a tone-deaf 0.75 [percentage point] Vat increase down the throats of South Africans,” he said.
“Just as the ANC refused to listen to objections from its coalition partners in the lead-up to its failed February Budget, the ANC now refuses to cut the fat,” added Burke.
“Instead, the formerly ‘pro-poor’ ANC continues with its campaign to increase Vat. This [is] when we all know that resilient South Africans across the board are stretched to breaking point.
“The DA refuses to be held hostage or intimidated by the ANC’s blatant threat to approach the EFF to pass this Vat-based budget,” he said.
“This is not responsible or collaborative governance – it is reckless and places further strain on the economy.”
This article was republished from Moneyweb. Read the original here.
