Trying times for the budget

Proposed tax hike faces strong resistance from pro-poor parties.

- Eric Mthobeli Naki, Molefe Seeletsa & Brian Sokutu

For the first time in the democratic South Africa, a proposed government budget may not be passed because of political infighting centred around the contentious proposed increase of value-added tax (VAT).

Facing off against a growing anti-VAT movement which crosses the ideological divide, Finance Minister Enoch Godongwana will need to convince the National Assembly and the National Council of Provinces to pass the government's revenue and spending plan for 2025-26.

However, the process will, for the first time, not be a rubber stamp process as in previous years, because the ANC no longer has a parliamentary majority. At it stands, the ANC needs the support of its government of national unity (GNU) partners to secure enough votes to pass the budget through both houses of parliament.

There is a widespread feeling among political parties that a gradual increase of VAT from 15% to 16% will be completely rejected when the budget is voted on in parliament.

It is a result that will force the finance minister to go back to the drawing board to try other means of revenue collection. But the rest of the budget is likely to be given the go-ahead.