Rise Mzansi leader Songezo Zibi at Constitution Hill on 19 April 2023 in Johannesburg. (Photo: Gallo Images / Fani Mahuntsi) 
Amid backlash against Finance Minister Enoch Godongwana’s proposed 0.5 percentage point VAT hike and confusion over whether it will be implemented on 1 May, Rise Mzansi leader Songezo Zibi says scrapping the increase by that date is not realistically possible.
Zibi was speaking to journalists on Wednesday evening in Johannesburg, where he revealed that the window for the process to amend the budget had lapsed as MPs are on a two-week constituency period.
“It takes time to implement those decisions. Whoever tells people that it can be switched on and off is really not being honest. It’s really more than likely that there will be VAT next month. And my view is that the window closed yesterday,” said Zibi, who is also the chair of Parliament’s Standing Committee on Public Accounts.
Read more: The VAT hike and the teetering GNU — a lose-lose situation for South Africans
The fiscal framework was passed with the help of political parties outside of the GNU, including ActionSA and Build One South Africa (Bosa), on the condition that there are talks to explore alternatives to the VAT hike. This was after the DA rejected the proposed increase on the basis that it would hurt the poor most and limit economic development. The party has also gone to court to challenge the legality of the Budget process.
Parties threatened to ‘withdraw support’
Both ActionSA and Bosa have threatened to withdraw their support if the ANC doesn’t keep its promise to find alternatives to a VAT increase within 30 days.
Meetings to find alternatives and to resolve the impasse are ongoing, with the latest meeting with various party leaders taking place on Thursday.
It remains to be seen whether or not the parties will indeed withdraw their support, as Godongwana has consistently maintained that he sees no alternative to the VAT increase. In an interview with eNCA on Wednesday, he reiterated that he doesn’t see any other option but to proceed with the hike.
“If I had alternatives to the 0.5%, I would be second-guessing my fiscal framework… I presented a fiscal framework, and I am confident that I would not have presented it if I had alternatives,” he said.
Zibi, whose Rise Mzansi is a member of the GNU, remains confident that at some point during the new financial year, it will be possible to amend the framework.
Rise Mzansi leader Songezo Zibi at Constitution Hill on 19 April 2023 in Johannesburg. (Photo: Gallo Images / Fani Mahuntsi)
‘Important distinction’
“The process of getting to an amendment has never been tried before, but we believe that the statutory framework provides an opportunity to do that.
“What it will come down to is whether the finance minister is genuinely able to say between themselves and SARS, we will be able to raise revenue in other ways, and therefore these specific revenue options are no longer necessary.
“It’s a very important distinction, rather than ‘we don’t want VAT but you are not giving any options’,” he said.
Read more: VAT court challenge stays; Treasury may drop increase: Three future GNU scenarios for SA
In a letter to the National Treasury, Zibi claimed that SARS could collect a minimum of R40-billion in additional revenue by 31 December 31 through various measures. He argued that this would be enough to offset the need for the proposed VAT and personal income tax increases, and could serve as an alternative to those measures.
Fiscal commitment on hope?
When asked by journalists whether it was not risky to base a fiscal commitment on the hope that SARS could raise such an amount, Zibi said the proposal was not speculative but was based on projections with detailed data he had received.
Read more: VAT hike could undermine Budget boost for health and education, say civil society groups
Although the fiscal framework has been passed, the ANC is in a tough spot as the parties it has been negotiating with have rejected the proposed VAT increase, making it harder to pass two important budget bills — the Division of Revenue Bill and the Appropriation Bill.
These bills are essential to finalising the Budget and deciding how public money will be spent.
Parliament spokesperson Moloto Mothapo told Daily Maverick the Division of Revenue Bill must be passed by the National Assembly 35 days after the adoption of the fiscal framework and revenue proposals. The scheduled date for considering the Bill is 6 May.
The National Assembly will then consider the Appropriations Bill on 10 June, so that the National Council of Provinces has time to process it before 31 July.
“In terms of the law, Parliament must process and pass the Appropriation Bill within four months from the start of the new financial year,” he said. DM