Budget 2025: Steenhuisen Says No Agreement Yet as VAT Hike Talks Continue

With just a week left before Finance Minister Enoch Godongwana presents the revised 2025 National Budget, Democratic Alliance (DA) leader John Steenhuisen has warned that there is still no agreement among the main Government of National Unity (GNU) partners.

“Constructive discussions on the budget are ongoing. There is no agreement yet, but we are working towards a resolution by 12 March,” Steenhuisen stated in a post on X on Tuesday.

His comments came after The Presidency released a statement following a special cabinet meeting on Monday, 3 March, aimed at resolving the budget deadlock. The key sticking point remains the ANC and National Treasury’s proposal to increase the Value-Added Tax (VAT) rate, a move strongly opposed by the DA and other GNU parties.

Cabinet Finalizes Input, But No Consensus

Despite ongoing disagreements, The Presidency maintains that the Cabinet’s input process into the budget has been finalized. The official statement read:

“With the conclusion of the Cabinet input process into the Budget, the Minister of Finance and National Treasury are now set to finalize the budget and table it before Parliament on 12 March 2025.”

This signals that Treasury now has the mandate to make a final call on budget funding options without requiring full Cabinet consensus.

Deadlock Over VAT Hike and Alternative Revenue Options

The budget impasse initially led to Godongwana postponing his budget speech on 19 February. The ANC-backed proposal to increase VAT from 15% to 17% faced significant pushback from the DA and other GNU members, who argue that a VAT hike would disproportionately hurt middle- and low-income South Africans.

Reports over the weekend suggested that the ANC had approached the Economic Freedom Fighters (EFF) to support a reduced VAT increase of 0.75 percentage points. However, the EFF is not a GNU partner, raising further concerns over the ANC’s negotiation tactics.

In response, DA finance spokesperson Dr. Mark Burke criticized the ANC, calling their VAT plan a “reckless gamble.”

“It is a shame that the ANC is willing to risk South Africa’s economic stability in a desperate attempt to force a tone-deaf 0.75% VAT increase down the throats of South Africans,” Burke stated.

Treasury to Decide, Parliament Faces Heated Debate

The latest developments suggest that rather than reaching a Cabinet-wide agreement, the decision on final budget allocations will rest with Treasury and Godongwana. According to Neil Coleman, co-founder of the Institute for Economic Justice, this move defers political tensions to Parliament.

“Prepare for a rough ride in Parliament,” Coleman warned in a post on X.

The ANC’s reluctance to make deeper spending cuts, coupled with the DA’s refusal to support a VAT hike, sets the stage for a heated budget debate when it is tabled next Wednesday. The coming days will determine whether a last-minute compromise can be reached or if Parliament will be forced to battle it out over South Africa’s fiscal future.

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