Democratic Alliance (DA)
By Mpho Moloi
Johannesburg, 24 April 2025, 09:31 AM SAST – The Democratic Alliance (DA) is celebrating a major win for South Africans as Finance Minister Enoch Godongwana reverses a planned 0.5% Value-Added Tax (VAT) hike, keeping the rate at 15% from 1 May 2025. The decision, announced in a Treasury statement overnight, follows intense negotiations with political parties and parliamentary committees, prompted by the DA’s court challenge alongside the Economic Freedom Fighters (EFF). While the reversal eases the financial strain on households, it leaves a R75 billion revenue shortfall, forcing the Treasury to rethink spending plans. The DA hails it as a triumph for every South African, while the African National Congress (ANC) and other parties prepare to address the nation at a joint media briefing today.
VAT Hike Scrapped: A Relief for Many
The Treasury confirmed that Godongwana will soon introduce the Rates and Monetary Amounts and Amendment of Revenue Laws Bill (Rates Bill) to maintain the VAT rate at 15%, abandoning the increase proposed in the March Budget. This comes after weeks of pressure, including a High Court hearing in the Western Cape where the DA and EFF sought to block the hike set for 1 May. DA Federal Council chairperson Helen Zille said, “The DA is awaiting a formal written offer from the minister’s lawyers before we respond to the request, and we will update the public in due course of any developments.”
National Spokesperson Karabo Khakhau echoed the sentiment, saying, “We’re very, very happy. This is what we wanted.” She emphasized that the DA fought the hike because South Africans, already battling rising living costs, couldn’t handle more at the till. The reversal spares households and businesses from higher prices on essentials like food and fuel, a relief in a country where unemployment sits above 32% and inflation bites hard.
Political Unity Behind the Decision
The decision stems from “extensive consultations with political parties” and recommendations from parliamentary committees, as noted in the Treasury statement. The ANC, Inkatha Freedom Party (IFP), ActionSA, Pan Africanist Congress (PAC), Rise Mzansi, Build One South Africa (BOSA), United Democratic Movement (UDM), Good Party, Al-Jama-ah, Patriotic Alliance (PA), and others have worked together to resolve the fiscal framework impasse. ANC National Spokesperson Mahlengi Bhengu-Motsiri highlighted this collaboration, saying, “In a moment that calls for matured leadership, collaboration, and constructive engagement, a number of political parties have demonstrated their resolve to place the national interest above narrow political point-scoring.”
These parties will hold a joint media briefing today at 10:00 at the Southern Sun Hotel in Sandton to outline the consensus reached. ANC Chief Whip Mdumiseni Ntuli, MP, welcomed the reversal, noting, “The proposed VAT increase had eclipsed pro-poor and expansionary aspects of the budget such as increased allocations to social support programmes and infrastructure investment.” He added that this move reflects “mature leadership” and sets a foundation for tackling national challenges together.
A R75 Billion Challenge Ahead
Keeping VAT at 15% means a R75 billion shortfall in projected revenue over the medium term. To address this, Godongwana has withdrawn the Appropriation Bill and Division of Revenue Bill, planning to propose expenditure adjustments. The Treasury stressed that Parliament must adjust spending to protect fiscal sustainability, hinting that extra revenue from the South African Revenue Service (SARS) could help. However, the initial VAT hike was meant to fund critical frontline services—hospitals, schools, and roads—hit by budget cuts due to South Africa’s tight finances.
The Treasury also scrapped measures to cushion low-income households, like expanding zero-rated food items, and will revisit other spending plans. Godongwana expects to table revised bills within weeks, but the R75 billion gap looms large. Khakhau countered Treasury’s warning of service cuts, pointing to the DA’s six-point plan: reducing government advertising, freezing non-essential hiring for a year, and auditing for “ghost employees.” She cited a Prasa audit showing 10% of its workforce may not exist, calling it a chance to save millions.
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