Budget scrapes through the National Assembly after DA revolt – The Mail & Guardian

Finance Minister Enoch Godongwana delivers the 2025 Budget. Photo: Jeffrey Abrahams/Gallo Images

The fiscal framework passed through the National Assembly by a narrow margin on Wednesday after the Democratic Alliance (DA) refused to support it, despite a warning from President Cyril Ramaphosa that this would be a betrayal of the government of national unity (GNU).

MPs approved the measure 194 votes to 182 against after a fiery debate, as much about the coalition as the merits of the tax proposals and the possibility of amending these in the coming month.

The DA announced immediately after the vote that it would challenge the budget in court.

In the debate, DA finance spokesperson Mark Burke argued that a recommendation by parliament’s finance committee that Finance Minister Enoch Godongwana use the next 30 days to find an alternative to a staggered VAT increase due to take effect from 1 May, was not worth the paper it was written on.

“Now, sure, supporters of this April Fool’s Day farce are very quick to point out that this report makes recommendations to relook at the tax increases. Madam speaker, the archives are full of reports with ignored recommendations,” he said.

“Reports in the hands of an ANC-led government mean nothing. Madam speaker, we squandered an opportunity to protect South Africans from VAT yesterday.”

Burke said the report adopted by the committee would preserve the fiscal framework as is, casting the tax hikes in stone and perpetuating poor fiscal and economic policy-making.

Tax experts agree with Burke’s assessment that the Money Bill Amendment Act, which sets out how the fiscal framework is processed, allowed only two options — MPs could either accept or amend it.

The route taken by the committee leaves the legislature in uncharted waters, both in law and in fact, because it is not clear how an amendment to the tax framework could be adopted in less than 30 days.

In his often plaintive contribution to the debate, Godongwana said there was room to do so but reminded those who called the tax proposals he tabled on 12 March anti-poor that the revenue they were meant to raise was intended precisely to fund services for the poor. 

“The debate is focused on one side of the equation, and that equation is on the revenue side,” he said. 

“Had we looked at the spending side of the equation and said what is being funded, those who talk about the poor would understand that the major part of this budget is targeted at those poor communities,” the minister said, before listing the budget increases for health, education and welfare grants. 

“Let’s be fair when we talk about poor communities, let’s do the numbers; the numbers refute everything you have said in this room.”

Godongwana said the tabling of the Rates and Monetary Amounts and Amendment Bills, which give effect to the tax proposals, on Friday allowed an opportunity for “all of us to have this engagement about 0.5 percent and all of that”.

“We would be more than happy to work with all people in this room with constructive proposals, but those constructive proposals must talk to two equations of this budget.” 

The minister said he believed it was time the budget process became more collaborative, with parliament playing a bigger role in the current budget and beyond, but it must also be honest and constructive. 

The DA has been neither, he said, noting that the party’s preferred solution was simply to shelve the tax increases and cut R13.5 billion in spending it would have covered. The party was furiously objecting to the decision not to adjust personal income tax brackets for inflation, but had earlier been a proponent of bracket creep, he added. 

“Parliament has an important role to play and the opportunity is this budget. Let’s debate honestly and let’s disagree honestly … Let’s make sure the debate is robust, don’t base it on lies.”

On Tuesday, a joint sitting of parliament’s standing and sitting committees on finance to draft a report on Godongwana’s fiscal and revenue proposals deadlocked between the ANC’s call to endorse it and the DA’s insistence that it be amended.

An amendment would have seen it sent back to the minister.

He would then have had 48 hours to consider the text, which would have forced a postponement of the debate, beyond the 16-day deadline in the Money Bills Amendment Procedure and Related Matters Act for the committees to report to the National Assembly on the revenue propopals.

A proposal by ActionSA, which is not a member of the ruling 10-party coalition, allowed the committee to fudge a way out of the impasse. 

It proposed that the fiscal framework be approved “subject to the strict condition that national treasury facilitates the receipt of substitute revenue proposals” in lieu of the proposed 0.5 percentage point VAT increase and personal income tax bracket creep looming next month.

Instead of an amendment, it was cast as a recommendation, a novel arrangement which not only the DA, but uMkhonto weSizwe (MK) party and the Economic Freedom Fighters (EFF) said had no place in law. 

DA leader John Steenhuisen said the party was preparing to file papers in the Western Cape high court, on the basis that the tax proposals were unconstitutional and that the committee’s processing of the fiscal framework was flawed “in that the fiscal framework was not put to the committee to approve or reject”.

He said this legal shortcoming was then carried forward into the National Assembly on Wednesday.

The same objection was raised in correspondence the DA sent to speaker Thoko Didiza after the committee adjourned. The EFF sent a similar note to the speaker, and pleaded in vain for the debate to be postponed.

Didiza declined, saying she had the authority of parliament’s legal advisers to proceed.

In the debate, EFF MP Omphile Maotwe accused the ANC of using its coalition partners, and ActionSA, to sell the poor down the river rather than prevail on Godongwana to consider alternatives, including a wealth tax.

She warned that persisting with his VAT increase will “ultimately collapse the confused GNU government”.

Burke charged that ActionSA and the Inkatha Freedom Party had either been played for fools and “genuinely thought they were changing the budget with their flimsy pointless recommendations” or knew these were a dead letter but cynically tried to curry favour with the ANC.

“Either way, it’s treachery.”

ActionSA’s Athol Trollip countered that the party was convinced the recommendations could avert tax increases.

“We remain unwavering in our commitment shielding ordinary South Africans from unjust and unnecessary tax hikes,” he said.

“Our approach allows for the necessary time to table alternative revenue proposals and most importantly to prevent a postponement of the VAT increase without triggering a full budget revision.”

MK party MP Des van Rooyen said the proposal was plain “weird” and his colleague Brian Molefe claimed, falsely, that it was not included in the committee’s final report to the National Assembly. 

“There is nothing in the law that allows us or you to further negotiate the budget in the next 30 days,” he added.

Molefe also aimed a broadside at the DA, saying it was trying to posture as the official opposition, a position it ceded to the MK party after joining the government of national unity.

“You cannot have your cake and eat it. If the GNU is too hot, then leave it,” he said.

The events of the past two days pose an existential crisis for the coalition.

On Tuesday night, Ramaphosa told the ANC caucus the DA would, by implication, be leading itself out of the partnership if it failed to vote for the fiscal and revenue proposals. His remarks were recorded without his knowledge and leaked.

His office told the Mail & Guardian on Wednesday the president was committed to the GNU, appreciated the work of DA cabinet ministers and preferred for the party to remain part of the coalition. But the budget was a test of its commitment to that pact.

“The president remains committed to keeping the GNU together and, in fact, with the DA’s continued participation,” his spokesperson, Vincent Magwenya, said shortly before the vote. 

“What the DA does during the budget vote today will determine its own commitment, not only to the GNU, but to the people of South Africa.” 

The Freedom Front Plus, a coalition partner with one cabinet position, also voted against the fiscal framework.