South Africa’s National Budget has been passed following a drawn-out session in Parliament today. By a slim majority of 192 for versus 182 against, political parties agreed to proceed with a fiscal framework that was agreed to between most parties and the ANC – excluding the DA.
In terms of this framework, the National Budget, which has followed a protracted process, has been passed with the proviso that National Treasury will find alternative solutions to raising the value-added tax as well as alleviating some of the income tax burden that the poor battle against.
Wednesday afternoon’s Budget Vote, which was characterised by heckling, mudslinging, multiple points of order, allegations that the process was not legal as well as having started 45 minutes late, made one thing abundantly clear: parties in the Government of National Unity were at odds with each other.
Following the debate on the National Budget, which took a total of three hours, political parties finally voted – an hour-long process that was also disrupted as some members of the house had to be ejected for apparently entering assembly after the doors were meant to have been locked.
During the debate, the EFF’s Omphile Maotwe said the party would challenge the Budget in court as the process has not followed the law, while African Christian Democratic Party MP Steve Swart said that National Treasury should have obtained the opinion of a senior advocate because “it will end up in court”.
Today was the latest in a series of attempts to get the National Budget passed following an abortive attempt in February when several members of the Government of National Unity would not approve it, given that it contained the proposal of a two-percentage point increase in VAT.
In the middle of last month, the National Budget was again tabled, this time with the suggestion that VAT be increased by 0.5 percentage points for each of the next two years. However, as discussions ahead of the vote went down to the wire, it was still not clear whether there would be any unity emanating from Wednesday's vote.
Ahead of Wednesday’s vote, there were 51 submissions as well as engagements that took place on Monday and Tuesday.
Several opposition parties argued that an increase in the value-added tax, which they said was still in the paperwork, would adversely affect the poor the most. Removing this increase and rectifying the tax bracket creep that was the result of there being no inflation-related adjustments to the tax tables leaves government with a revenue hole of at least R28 billion.
In an impassioned defense of the National Budget, Minister of Finance Enoch Godongwana, said that any impact that an increase in VAT would have on the poor was more than offset by an increase in VAT-exempt products as well as increased spending on social services such as in healthcare and education.
Godongwana said that National Treasury had listened to those who had commented on the figures. He said that this was demonstrated by the fact that the South African Revenue Service had been given more money to collect outstanding taxes worth some R800 billion.
“I don’t think you can vote against the budget and tomorrow be part of its implementation,” he said.
Opinions were heard from multiple members of Parliament, including the MK’s Des van Rooyen, who argued that National Treasury had not listened to its proposals in terms of reviewing tax incentives for companies and suspending retirement annuities for government staff.
The DA’s Mark Burke said the entire process had been “farcical” and tax increases in the form of VAT were still “baked into the fiscal framework”.
Maotwe said that tax brackets should be adjusted to ensure that poor people were not pushed into a higher bracket, “apartheid wealth” should be taxed, the revenue service should be empowered to collect more taxes, there should be more frontline staff, and corporations should face additional taxes. All these proposals, she said, were ignored.
Indicating his party’s support for the fiscal framework, the IFP’s Nhlanhla Hadebe urged that the government take a cautious approach to budgeting given the current geopolitical environment. At the same time, he said the party wanted more oversight over spending, additional frontline staff, and support for smaller businesses, the youth, and agriculture.
Wouter Wessels, from the FF+, stated that the party of not supportive of a VAT increase in an environment in which South Africans were suffering due to a lack of jobs in a lackluster economic environment. Saying that “a tax revolt is imminent in South Africa,” he said, “we should not overburden South Africans anymore”.
ActionSA’s Athol Trollip noted that “we have a budget impasse” and South Africans had been made poorer during the time that the National Budget has taken to get to a position whereby parties can vote as the rand has devalued over the period.
Swart also cautioned that the fiscal framework was premised on gross domestic product growth of 1.9%, which was ambitious as 2024’s gross domestic product growth was only 0.6% year-on-year.
On behalf of the United Democratic Front, Nqabayomzi Kwankwa said that the process of consultation should have started many months ago, a lesson that must now be learned. “It’s easy to say no tax increase, but where are we going to get the other revenue from?”