DA leader John Steenhuisen called for a ‘pro-growth’ budget on Wednesday. A political analyst said the postponement indicated that the gloves were off between coalition parties. Picture: John Steenhuisen/X
The Government of National Unity (GNU) has hit another stumbling block, this time over a proposed two percentage point increase in value-added tax (VAT).
Finance Minister Enoch Godongwana was expected to announce the VAT hike during his budget speech in Parliament on Wednesday. However, the Democratic Alliance (DA), a key partner in the African National Congress (ANC)-led GNU, firmly opposed any tax increases, arguing they would disproportionately impact the poorest citizens.
In a last-minute development, National Assembly Speaker Thoko Didiza informed MPs that the budget speech would be postponed to March. This was an unprecedented move in post-apartheid South Africa.
Political economy analyst Daniel Silke described the development as a “turning point for the GNU,” highlighting the DA’s growing influence.
“If anything, the DA has shown that it is not simply a rubber stamp within the GNU. It also underscores how far the once-dominant ANC has fallen. However, the critical question of ‘where will the money come from?’ remains unanswered amid a weak domestic economy and global uncertainties,” Silke noted in a post on X.
In a separate post, Silke further emphasised the deepening divide within the GNU, stating:
“Perhaps the #Budget2025 delay now reflects—for the first time—the constraints of the GNU on the ANC. Either the ANC reassesses its dogmatic positions, or it works to undermine the current GNU composition. The gloves are off.”
Richard Calland, director of the Cambridge Institute for Sustainability Leadership (CISL), provided additional insight into the tensions, stating:
“It’s common for coalition partners to squabble over the national budget. How resources are allocated is not a technical issue; it is ideological. What is significant is not that there is a fight within the GNU but that they could not find compromise in time.”
John Steenhuisen, leader of the DA, framed the debate as an opportunity for more pragmatic economic policies:
“We need to look at more innovative ways that are more pro-growth to be able to get the economy moving, to create jobs, and to end poverty. We need a budget that speaks to those key objectives. It’s a healthy sign that there are now different voices around the table, and that those voices must find each other now before a budget is tabled.”
The DA has previously faced criticism for allowing the ANC to advance contentious legislation, including the Basic Education Amendment Laws Act (BELA) and the Expropriation Act.
