DA and ANC hit brick wall, while ActionSA agrees to back budget in Parliament if VAT increase dropped

1 Apr 2025

ANC President Cyril Ramaphosa and DA leader John Steenhuisen were reportedly meeting on Tuesday to rescue the Budget — and the GNU — after talks collapsed.

Negotiations between the ANC and DA over the national budget stretched into the early hours of Tuesday morning but ended without an agreement as the long-standing deadlock between the Government of National Unity (GNU) partners continues.

It came to a head on Tuesday, 1 April 2025, before a joint meeting of Parliament’s finance committees was due to discuss the fiscal framework, which, according to Parliament, establishes economic policy and revenue projections and sets the overall limits to government spending.

This report must be adopted within 16 days after Finance Minister Enoch Godongwana tabled the budget on 12 March.

According to reports, ANC and DA insiders had suggested that they were making progress in negotiations over contentious issues, such as the 0.5 percentage point VAT increase and the DA’s demand to take a stronger role on economic policy.

DA leader John Steenhuisen was due to address the media at 8.30am on Tuesday “on the outcomes and the implications for the budget, the Government of National Unity and the country”, but after unsuccessful late-night negotiations, that briefing was scrapped.

Time is almost up. Last night, the ANC refused to finalise an agreement on growth and spending reforms, imperilling the GNU. The DA will oppose the budget unless and until a written agreement is reached.

— John Steenhuisen MP (@jsteenhuisen) April 1, 2025

Instead, the party’s finance spokesperson, Dr Mark Burke, told journalists in the parliamentary precinct that the DA had been “open-minded” but “the ANC has failed to agree to the reforms we need to get the economy going”.

Burke added that because the ANC refused to agree to its “politically neutral” proposals, the DA would argue for budget amendments focusing on increasing the revenue base without raising taxes.

“I have now been mandated to go to this committee to amend the fiscal framework, such as there will be no VAT increases,” said Burke.

The DA’s demands reportedly include scrapping import tariffs, accelerating reform at the Cape Town and Richard’s Bay ports, and scrapping the ANC’s localisation policy. A sticking point has reportedly been its call to take a stronger role in the economy and to appoint Deputy Finance Minister Ashor Sarupen as co-chairperson of Operation Vulindlela, located in the Presidency.

News24 reported that Ramaphosa and Steenhuisen would be meeting on Tuesday to discuss the stumbling blocks.

Read more: Big Budget Bust-Up — here’s why DA might be overplaying its hand

ANC confident

Despite failing to reach an agreement, ANC Secretary-General Fikile Mbalula was confident the budget would pass, warning that there would be implications for the GNU should their partners not vote in favour of it.

With the DA indicating it would not support the budget, the ANC is now counting on smaller political parties such as ActionSA and others to back the budget in Wednesday’s National Assembly vote, while other parties have firmly rejected it.

“There have been issues among GNU parties around the issue of VAT, and as well as those who are outside (the GNU), but we need the budget to be passed in order for us to proceed to govern and stabilise the economy and ensure that the economy remains stable and pursue economic growth,” Mbalula said.

He added that the failure to reach an agreement with the DA was due to the party’s numerous demands, which he described as a “catalogue” that they kept pushing back on. The situation was further complicated by the DA allegedly leaking details of the talks to the media, which, according to Mbalula, served to polarise the negotiations.

He claimed the DA’s proposals were unrelated to Godongwana’s budget.

“We need to pass the budget for the sake of South Africa, but at the same time we need to be alive and talk to others. It’s not really about concessions.

“It’s about what the minister has presented before us, and we think that does not address most of the concerns that people have raised in their political parties, that’s why we have been open with everyone,” Mbalula said.

Failure to pass the budget would result in undesirable outcomes, including a negative impact on the markets, Mbalula said.

Should the DA forge ahead with the decision not to support the budget, the GNU could possibly collapse, he said.

Quizzed about this by journalists, Mbalula said: “Everything has implications.”

Commenting further on the talks, Mbalula warned: “If you engage with this process on the basis of political (point) scoring, it may lead to situations in which the GNU itself, given the outcome, has to be reconfigured.”

A GNU configuration?

As the DA withdraws its support for the budget, the ANC is looking for support to get it over the line. ActionSA, with six seats in the National Assembly, could be crucial if it offers its support.

TimesLive reported on Tuesday that ActionSA had agreed on a set of proposals for the parties to take forward.

An ActionSA insider told Daily Maverick that the ANC made several concessions in exchange for its support in the National Assembly on Wednesday, 2 April.

As a result, ActionSA agreed to narrow its demands, prioritising only its challenge to VAT and tax creep on income tax, since these were currently creating the most concern among South Africans.

ActionSA’s national chairperson Micheal Beaumont told Daily Maverick that a second meeting with ANC officials had taken place at the weekend, although he would not be drawn into discussing the details.

“ActionSA can confirm that we met with the ANC on Sunday night at their request. In this engagement, a number of ideas were exchanged in relation to the budget, but ActionSA has made its position clear that ultimately we cannot move forward with any budget that imposes additional VAT or income tax increases on the South African people.

“That position is now subject to internal consideration of the ANC. We will obviously learn in good time how they wish to respond,” Beaumont said.

During the parliamentary sitting, ActionSA’s Alan Beesley tabled an amendment stating his party’s position, saying it would support the budget if the VAT increase and income tax creep were scrapped, which multiple ANC MPs supported.

The Sunday Times reported that EFF Secretary-General Marshall Dlamini said the red berets would get into serious negotiations with the ANC on the GNU when the DA and the Freedom Front Plus were removed from government.

“We are ready to participate in the government, but not with racists,” Dlamini said.

Umkhonto Wesizwe (MK) party national spokesperson Nhlamulo Ndhlela previously confirmed to Daily Maverick that the party had met with the ANC last week to discuss economic policy.

“We made it very clear that we will not entertain a VAT increase and that they must rather put forward other formal proposals, which we would then consider.”

Ndhlela said that the party had put forward a series of proposals. These included increasing corporate tax by one percentage point and fast-tracking the collection of nearly R800-billion in outstanding South African Revenue Service revenue, which could have a significant impact on the fiscus.

The inability to agree on the budget is one of many incidents that have highlighted significant fractures within the fragile 10-party GNU, which is still divided over several pieces of legislation, including the National Health Insurance Act, Bela Act and Expropriation Act.

What now?

Once Parliament’s joint finance committees consider the fiscal framework and their report is adopted, it will then go to the National Assembly, scheduled for Wednesday.

Read more: What happens next for a contested Budget?

The joint finance committees were still meeting at the time of writing.

During the sitting, some MPs, mainly from the MK party, wanted clarity on which organisations had commented on the budget during the public participation process.

The committees heard that only two out of 51 organisations that submitted responses were in support of a VAT increase.

If the budget is not passed by 1 April, the start of the new fiscal year, the law allows the government to continue spending up to 45% of the previous year’s budget until Parliament approves the new budget.

However, in this period, it means the government cannot implement new budgetary allocations without parliamentary approval, according to Reuters. DM

Categories:

Tags:

DM is much better if you are signed in...

South Africa

ANC confident

A GNU configuration?

What now?