The Democratic Alliance is committed to continuing talks with the ANC to rescue the government of national unity (GNU), but is adamant on its stance that a 0.5 percentage point VAT increase set to kick in from May would be unaffordable for South Africans.
The two organisations confirmed on Saturday that they had met to try and resolve their current feud dating back to 19 February when Finance Minister Enoch Godongwana had to abandon tabling the 2025 budget in parliament after DA leader John Steenhuisen made clear the party would not support what was then an even higher two percentage point VAT hike.
The meeting was “constructive”, a DA federal executive member who participated told the Mail & Guardian on Saturday night, echoing the same word both parties used in their respective statements.
The source, who spoke on condition of anonymity, said the DA however reiterated its stance on the VAT increase.
The party also urged the ANC to keep the discussions within the GNU, as its recent attempts to seek support from parties outside it were alienating its main coalition partner.
But the source added that both parties had agreed to continue trying to find a way around the VAT issue, with another meeting expected in the coming week.
“The sense is that both parties don’t want to walk away, and we believe the ANC knows what is expected. They need us as we need them. As it stands, we are not walking away.”
In its statement on Saturday the ANC, whose team was led by secretary-general Fikile Mbalula, said the talks in Johannesburg were constructive and reaffirmed its “unwavering commitment to the principles of dialogue, nation-building, and collective leadership in addressing the urgent socio-economic needs of our people”.
“The ANC will continue to engage all GNU partners, civil society, and other stakeholders in pursuit of a stable, inclusive, and effective government that places the interests of South Africans at the heart of all its decisions,” it added.
For her part, DA federal council chairperson Helen Zille also called the discussions “constructive”, with “both sides speaking respectfully yet frankly about the need to resolve the impasse over the budget and to enhance cooperation between the two parties in the context of the government of national unity”.
But she reiterated that South Africans could not afford a VAT increase in the absence of meaningful reform that would increase economic growth and create jobs.
After his first proposal for a two percentage point rise met with resistance even from several ANC ministers in February, Godongwana tabled a revised budget in parliament on 12 March, in which he proposed a one percentage point increase staggered over two years.
Following heated debate in parliament, and financial committee processes mired in acrimony, the fiscal framework scraped through the National Assembly by a narrow margin on 2 April.
It did so thanks to the support of ActionSA, which is not a member of the coalition, but was invited to talks with the ANC this week. The party said afterwards that as matters stood, it had no interest in joining a grand coalition, and could not consent to a VAT increase taking effect on May 1.
At ActionSA’s urging, a suggestion that alternative revenue be found to avert an increase was included in a report by parliament’s finance committees to the National Assembly recommending the adoption of the framework. However, the recommendation is not binding.
The DA filed a court application to challenge the budgetary process a day after the National Assembly vote.
The days since have seen a flurry of internal discussions within both parties about the way forward, and the ANC is exploring alliances with other parties outside the coalition such as ActionSA, should the DA opt to walk away, taking its crucial parliamentary votes with it.
The source who spoke to the M&G on Saturday said the DA threatened to withdraw its support for President Cyril Ramaphosa if the ANC continued on this trajectory, making him vulnerable within his own party should the coalition fall apart.
Last week, another source said sentiment in the DA on whether to stay or not was deeply divided and shifting daily, with ongoing uncertainty about Zille’s stance. The six DA ministers in Ramaphosa’s cabinet, formed after his party lost its outright parliament majority in May 2024 general elections, have signalled a willingness to continue working with the ANC.
Except the DA and the Freedom Front Plus, all parties to the government coalition voted in favour of the fiscal framework and sources said many shared in the ANC’s frustration with the continuous conflict in the structure.
Amid last week’s consultations between the ANC and other members of the coalition, the leader of a smaller party told the M&G that efforts to find an alternative to a VAT increase were part of the discussions.
There was still scope if not to avert the 0.5 percentage point hike taking effect on 1 May, then to reverse it within a month or three by reprioritising spending to find the R13 billion Godongwana planned to raise through the tax increase elsewhere.
This signals that the minister will continue to face pressure in coming weeks to agree to an alternative way of raising revenue.
