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DA Loses VAT Fight as ActionSA and ANC Push for Budget Amendments
The Democratic Alliance (DA) has suffered a significant defeat in its fight against the controversial VAT hike proposed in the 2025 Budget. The African National Congress (ANC) sided with ActionSA to remove the 0.5% VAT increase, giving taxpayers some much-needed relief.
ActionSA’s Proposal and ANC’s Support
ActionSA MP Alan Beesley led the charge with a proposal calling for a 30-day pause in the Budget process. The goal is to allow the National Treasury to reconsider the country’s fiscal framework, roll back the proposed VAT hike, and address the issue of “bracket creep” in the personal income tax system.
During a debate in parliament’s joint committee on finance, the ANC put forward an amendment to remove both the VAT and income tax increases for 2025/2026. Despite the DA’s counterproposal to eliminate the VAT hike through spending cuts, it failed to gain support in the committee. The ANC, ActionSA, and the Inkatha Freedom Party (IFP) now control the majority in the committee, making it likely the fiscal framework will be amended in line with ActionSA’s proposal.
DA’s Criticism of ActionSA’s Support
The DA has strongly condemned ActionSA’s decision to back the ANC’s budget. The party argues that the DA’s alternative plan would have fostered economic growth, reduced government waste, and avoided VAT hikes. “By supporting this budget, ActionSA has condemned South Africans to higher living costs and missed the opportunity for the necessary government spending review,” said the DA in a statement.
The DA also criticized ActionSA for reversing its stance. Initially, ActionSA had vowed not to support the ANC’s VAT hike but ultimately sided with the party, a move the DA calls a “sell-out tactic.”
Beesley, who led the discussions, clarified that the negotiations were focused on minimizing the impact of excessive taxes and improving service delivery. While ActionSA accepted the imperfect nature of the budget, it set conditions for its support, including viable alternatives to cover the revenue gap without resorting to higher taxes.
This new development has already caused delays in the parliamentary schedule. The planned National Assembly sitting on Wednesday is expected to be postponed. According to parliamentary rules, the Minister of Finance must respond to any significant changes in the fiscal framework within 48 hours. If ActionSA’s amendment is passed, the Budget process will be suspended for 30 days, allowing the Treasury to rework the figures and submit a revised framework to Parliament.
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Sourced:IOL
