Finance minister Enoch Godongwana got a shock of his life when he was forced to postpone the 2025 Budget Speech, not once but twice.
The postponements, a first in South Africa’s history, were caused by sharp disagreements over proposed Value-Added Tax (VAT) increases.
The February 19 budget was called off after political parties inside and outside the government of national unity (GNU) got wind of Godongwana’s plan to hike the VAT by two percentage points from 15% to 17%.
The proposed 2% VAT increase was projected to raise R58-billion.
Though he enjoyed support from his political party, the ANC, the plan was opposed by the DA, the second-largest political party in the GNU.
Major political parties outside the GNU that opposed the tax hike, which would have
increased the price of goods and services, included the EFF, MK Party, and ActionSA.
This meant the ANC, which leads the GNU, did not have a majority vote to push through the main parts of the budget in the National Assembly.
This resulted in the budget speech being postponed to March.
In the March 12 budget speech, delivered in the National Assembly, Godongwana changed tack by proposing to raise the VAT by one percentage point over the next two government financial years, which meant to bring the VAT to 16% and result in total revenue collection increase of R42.5-billion over the next two years.
The opposition parties once again slammed the move, resulting in a court battle.
On April 24, the finance ministry announced that the VAT increase would be withdrawn, citing discussions with other stakeholders as the reason.
This was after the DA and EFF had sued Godongwana in order to prevent his 0.5% VAT increase from going into effect in May.
Their legal teams contended that the VAT hike was unconstitutional during a court hearing.
This tax increase withdrawal saw an exhausted Godongwana delivering the budget speech for the third time in one fiscal year on May 21.
However, unlike the previous times, Godongwana was third time lucky after he aborted two previous attempts to present his budget for the 2025/2026 financial year in February and March.
After he delivered the budget speech, political parties in parliament expressed mixed reactions to the minister’s budget speech 3.0, with GNU partners, the ANC and the DA, being supportive while the official opposition, the MK-Party, EFF, and ATM were firm against the budget.
ANC national spokesperson Mahlengi Bhengu-Motsiri said the budget will ensure there is economic growth and job creation in South Africa.
“Through this budget, South Africa remains firmly on the path of economic transformation and growth. This is a developmental, transformative people’s budget.
“The budget prioritises areas that are aligned with our national development objectives, including education, health, infrastructure, housing, early childhood development, public transport, social wage, and arts and culture.
“These investments underscore the budget’s developmental and transformative nature, aimed at improving the quality of life for all South Africans,” said Bhengu-Motsiri.
DA MP Mark-John Burke said Godongwana’s is the budget the party “should be able to support”.
“The budget presented to us is a workable version. We should be able to support this budget.
Our country has an expenditure problem. I am excited that the minister [Godongwana] announced a spending review.
“We need an aggressive focus on infrastructure development. This was announced now,” said Burke.
MK-Party spokesperson Nhlamulo Ndhlela said the budget is anti-poor. “This budget is an indictment against the poor. The budget was absent as its absent president [Cyril Ramaphosa].
“The increase to the general fuel levy is meant to replace the VAT increase, which was scrapped. This government continues debting our people and costing our people in the pocket.
“This budget is a punishment to the poor. It gives relief to the rich. There is nothing delivered by this minister,” said Ndhlela.
EFF leader Julius Malema said the budget shows that the ANC has no plan for economic growth and job creation.
“The ANC is stuck. They have no believable plan to grow the economy and create jobs. This is an austerity budget. This is not a pro-poor budget. We do not support it. The minister should increase corporate tax, inheritance tax, and luxurious land tax… Government should tax the rich and deal with illicit financial flows,” said Malema.
