Minister of Finance Enoch Godongwana. | John Steenhuisen | Gayton McKenzie | Pieter Groenewald. | Julius Malema. (Photos : Phando Jikelo/ Parliament of SA) 
EFF leader Julius Malema has dismissed reports that the ANC has approached the party with its new proposal of a 0.75 percentage point increase in VAT to balance the government’s books.
Malema has rejected any form of VAT increase, arguing that it would only hurt the poor. Instead, he has suggested an increase in corporate taxes and the introduction of a wealth tax.
On Sunday, 2 March, the Sunday Times reported that the National Treasury was now proposing a 0.75 percentage point increase in VAT, with the backing of the ANC.
The newspaper reported that the ANC’s second deputy secretary-general, Monitoring and Evaluation Minister Maropene Ramokgopa, had warned the DA that President Cyril Ramaphosa’s patience with the party was wearing thin, and that the ANC was potentially looking to approach the EFF to strike a deal.
The Budget, supposed to have been tabled on 19 February, was postponed to 12 March after parties in the GNU were divided on a proposed VAT increase of two percentage points. The Cabinet met on Monday to decide a way forward but no outcome had been reported at the time of writing.
Read more: How the ANC’s GNU partners revolted after hearing of VAT increase at 11th hour
Speaking to reporters on the sidelines of his birthday celebration in Tembisa on Monday, Malema dismissed the Sunday Times’ report, saying that a general conversation on VAT increase had taken place.
“No one is talking to us, there has never been any kind of engagement between the EFF and the ANC. We wanted them to present a Budget, we said let there be a discussion and the people will decide if they want it or not.”
The conversation, according to Malema, should focus on growing the economy and creating jobs.
“We have got a lot of minerals in this country which can be benefited from,” he said.
“That is the kind of language we should be having a discussion on and not whether to increase [VAT by] 2% or 0.75%.”
He warned that the coalition government’s failure to pass the Budget meant the country was in “trouble”, operating on “autopilot”.
‘Tone-deaf move’
The second-largest party in the GNU, the DA has strongly opposed any increase in the VAT rate.
In a statement on Sunday, the party’s spokesperson on finance, Mark Burke, called the 0.75 percentage point increase in VAT a “tone-deaf” move from the ANC which threatened SA’s economic stability.
“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. Instead, the formerly ‘pro-poor’ ANC continues with its campaign to increase VAT. This when we all know that resilient South Africans across the board are stretched to the 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. This is not responsible, or collaborative governance — it is reckless and places further strain on the economy,” said Burke.
Read more: ‘We must now move on’ – Ramaphosa downplays Budget fiasco
The DA had previously proposed cost-cutting measures, suggesting, among other things, cutting Sector Education and Training Authorities and the National Skills Fund, ending the South African National Defence Force (SANDF) troop deployment in the Democratic Republic of the Congo, and doing away with the Youth Development Agency and the Petroleum Agency SA.
The Patriotic Alliance (PA) has also said a hard no to a VAT increase.
PA spokesperson Steve Motale said: “The PA does not support the reported proposed 0.75 percentage point VAT increase.
“We remain adamant that a more capacitated and supported SARS [South African Revenue Service] could bring in as much as another R450-billion a year. All efforts must therefore be channelled towards boosting SARS to achieve its mandate.”
The Good party’s secretary-general, Brett Herron, told Daily Maverick the party was opposed to a VAT increase, “since it is a regressive tax and disproportionately affects middle- to lower-income households and of course most disproportionately affects the poorest people.”
The party had suggested other ways to fund the budget “without introducing austerity measures”, said Herron. This included adjusting the tax credits on retirement fund contributions, introducing a wealth tax or “a special wealth tax on super wealth”, and capacitating SARS “to enforce tax compliance and collect tax revenue”.
The Freedom Front Plus (FF Plus) “does not support any increase in VAT”, the party’s national chairperson, Wouter Wessels, told Daily Maverick.
“An increase will harm the economy and lead to more unemployment and impoverishment. We have proposed several cost-cutting measures which we do believe will address the Budget deficit more effectively than unsustainable revenue enhancement measures, such as tax or VAT increases.”
Read more: FF Plus constituency ‘very sceptical’ of GNU, says new party leader Corné Mulder
In response to questions from Daily Maverick on Monday morning, Rise Mzansi’s Mabine Seabe said the party did “not support tax increases, especially given the negative impact they would have on the poor, working-class and middle-class households.
“That said, should the 0.75 percentage point increase be a fait accompli, it will be important that the basket of VAT-exempt goods is increased in order to protect said households.
“The proposed 0.75 percentage point increase must be measured against the available suite of options; and the counter-measures employed to shield poor, working-class and middle-class households from an increase in VAT. The Budget must be assessed in its entirety, which has not been done outside of Cabinet, which Rise Mzansi does not serve on,” he said.
Seabe noted Finance Minister Enoch Godongwana’s difficult task of balancing the government’s books.
“Money is extremely tight and there are limited available options — primarily being cuts, increased taxes or borrowing — each with its limitations and negative implications. We are in this crisis because of poor leadership, bad governance and corruption, particularly over the last 15 years.
“This is the reality that the finance minister needs to articulate and solve. We can no longer kick the can down the road.”
Al Jama-ah spokesperson Nisa Hendricks told Daily Maverick the party supported the proposed VAT increase “on condition that all items in the normal food basket of social grant beneficiaries are zero-rated, and that there is a process to reduce VAT by 2030 to just 10%.”
IFP, PAC and UDM yet to comment
The Inkatha Freedom Party (IFP) declined to comment on Monday.
“Noting that the budgeting process is still under way in Cabinet, the IFP will await this process, which we are participating in, to run its course to finality before commenting,” said deputy transport minister and IFP spokesperson Mkhuleko Hlengwa.
However, the IFP has previously said it was opposed to the initial two percentage point VAT increase proposal, saying this would “run contrary to the commitments” of the GNU.
The United Democratic Movement (UDM) deputy president, Nqabayomzi Kwankwa, also previously told Daily Maverick the party was “opposed to any increase in VAT”, but on Monday said it was “difficult to engage” with the increase proposal as the GNU clearing house mechanism had not met yet.
The clearing house — the multiparty, issue-specific negotiating committee set up to deal with policy disputes — was supposed to meet on Tuesday, 25 February, but this was postponed to Friday, 7 March.
Deputy President Paul Mashatile is the chair of the dispute resolution committee. In its first meeting of 2025, the committee was expected to finally adopt its terms of reference and discuss the process that led to the postponement of the Budget, according to a News24 report.
Daily Maverick sent questions to Mashatile’s spokesperson on Monday afternoon asking why Tuesday’s meeting had been postponed, and what was on the agenda for Friday. We had not received a response by the time of publication.
Daily Maverick had also not received a response from the Pan Africanist Congress of Azania (PAC) by the time of publication. DM