National Treasury is going back to the drawing board to see if it is possible to abandon the 0.5 percentage point hike in value-added tax (VAT) along with the income tax bracket increase.
This comes after ActionSA adopted the current budget and the ANC backing their budget framework report in return on Tuesday during a joint meeting of the Standing Committee and Select Committee on Finance at the National Council of Provinces (NCOP) building in Cape Town.
The ANC and ActionSA together hold the majority in the Standing Committee on Finance.
The proposed report recommends that National Treasury look at alternative methods of increasing revenue within 30 days.
In a statement issued by ActionSA’s parliamentary leader, Athol Trollip, following the sitting, they say they are committed to “always putting South Africans first”.
“ActionSA will remain focused on cutting wasteful expenditure, curbing corruption, and prioritising service delivery over reckless tax increases. We call on all stakeholders to contribute to sustainable and equitable revenue solutions that do not compromise the financial well-being of our citizens,” the statement reads.
The ANC and DA have been at loggerheads about the 2025/2026 fiscal framework. This has led to the ANC looking to parties outside of the government of national unity to pass the budget.
The DA slammed Action SA for their “sell-out tactics” for adopting the controversial budget.
“ActionSA has shamefully shut down the required government spending review. This is extremely irresponsible and will hand a blank cheque to the ANC to continue spending government money without review.
“This is a despicable U-turn from ActionSA, which publicly committed to not supporting the ANC’s VAT budget and yet has now supported it,” according to the DA.
Meanwhile, the Economic Freedom Fighters (EFF) believes that the processes that have unfolded in the NCOP can be described as “deeply flawed, incoherent, and illegal”.
The red berets go as far as accusing ActionSA of misleading the public and claiming a premature victory, as they are among the parties that have supported the budget in its current form with the expectation that it will be amended at a later stage.
“In an exhibition of deceit, ActionSA has attempted to suggest that through their request that ought to be reflected in the Standing Committee of Finance Report, which requests that National Treasury must find an alternative to VAT hikes within 30-days, they have proposed an aversion or amendment of the VAT hikes,’” according to the party.
The EFF, which has also been in talks with the ANC, has unequivocally rejected the VAT increase.
“The EFF reaffirms its commitment to radical economic transformation, and we will continue to fight inside and outside Parliament for a budget that reflects the will of the people, not the interests of capital,” said the party.
The matter is expected to proceed to the National Assembly on Wednesday (2 April).
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