South Africans woke up to some good news that VAT will remain at 15% following the National Treasury’s consultation with various political parties on finding alternatives.
In an unprecedented move, the tabling of the national budget in Parliament was postponed from February to March.
The contentious budget was later passed in Parliament after a tight vote.
Veteran economist, Duma Gqubule, says the VAT hike impasse has shown the incompetence of the National Treasury, calling for the Minister to resign.
He points out that Godongwana’s first budget consisted of a proposed 2% VAT hike, he then returned to Parliament with the staggered 1% hike, which was heavily rejected.
The Minister has warned that projected revenue will fall short by approximately R75 billion over the medium term as a result of the U-turn.
He has now gazetted the Rates Bill, formally reversing the controversial increase.
Economist, Dawie Roodt, says the Treasury should urgently look into government spending as a way to address the shortfall.
He says politically, the ANC is the biggest loser in this entire debacle, adding that this is a big egg on their face.
The ANC has saluted all political parties that put South Africa first and worked with maturity, humility, and integrity to reject any measures that would compromise the livelihoods of millions.
“This outcome is not a victory for any one party, it is a victory for our people and for responsible, progressive leadership. The DA’s typical opportunistic attempt to claim victory is a continuation of their typical insult to South Africans whom they consider voting cattle with no sense of thinking or reasoning,” says the country’s biggest political party.
Several other political parties that united to oppose the VAT hike have commended the power of collaboration and the focus on putting South Africans first.
ActionSA leader, Herman Mashaba, says the reversal was achieved by political parties that were willing to put their differences aside and demonstrate maturity and not those who ran to the courts.
“Even from the opposition benches, it was clear that our national budget was being held hostage by certain parties within the GNU to negotiations about matters that had nothing to do with the budget. It is indeed quite bizarre that opposition political parties outside of the GNU had to step in and negotiate what a particular political party inside the GNU preferred to pursue through the courts,” adds the ActionSA leader.
PA deputy president, Kenny Kunene, has slammed the DA for claiming victory for the reversed VAT hike, labelling them an extortionist party.
“The DA waking up this morning and seeing the Minister’s statement and claiming victory is hypocritical because they have never rejected the VAT increase at the beginning, instead they tried to use it to privatise what South Africans own,” adds Kunene.
DA Federal Council chair, Helen Zille, says the Finance Minister should hang his head in shame over the VAT impasse.
Zille says the fact that Godongwana was hell-bent that there were no other alternatives to the budget but to increase VAT, shows that the ANC cannot be trusted.
The EFF has also joined calls for the Minister to resign.
The red berets say Godongwana lacks depth and poses a threat to the economic stability of the country.
“The budget failed to respond decisively to the crisis of unemployment and poor economic growth that now threatens a national collapse.”
Civic organisation, Black Sash, is calling for fair solutions to raise money that will address the shortfall revenue.
The organisation’s Oliver Meth says a special tax on wealth could help close the gap.
“But we believe there are better and fairer ways to raise money without hurting the poor. Like taxing the rich – those with big houses, big businesses and lots of money should pay more tax. We believe that economic decisions must protect the dignity and rights of all people—especially those who are already struggling.”
Meth says the poorest people end up paying more when VAT goes up.
“Increasing VAT would have made life even harder for families who are just trying to survive,” he adds.
Labour federation, Cosatu, says the decision to scrap VAT will bring much-needed relief to workers who are already struggling with the rising cost of living.
Cosatu has long held the view that the contentious VAT hike should be scrapped and called for more progressive revenue options to stimulate economic growth and create much-needed jobs.
Cosatu’s Matthew Parks urged the Treasury to find other ways to address the projected multi-billion rand shortfall.
