ANC Secretary-General Fikile Mbalula stated that the recent increase in value-added tax (VAT) has created a disagreement between the ANC and its partners in the Government of National Unity (GNU).
The former minister expressed confidence that a resolution can be reached with all GNU partners. However, discussions held on Monday and Tuesday appear to have come to a standstill.
Starting from 1 May, VAT will be raised for the fourth time in the country’s history by 0.5 percentage points. Mbalula indicated that if the country’s economy improves, there may be an opportunity to reduce VAT in the future.
“Right from the onset when Treasury came up with 2% [VAT hike], we did not agree but we ran out of options in terms of what we need to do except to cushion us, to have a zero percent intervention which is not permanent,” Mbalula added. As our economic situation is perfected, this zero percent is not permanent, it will be withdrawn.”
GNU to reach an agreement over VAT, says Mbalula
“We need to pass the budget for the sake of SA, but at the same time, we need to be alive and talk to each other. It is not about concessions but about what has been presented by the minister and does not address most of the concerns people have raised in their parties,” Mbalula said.
Last month, Finance Minister Enoch Godongwana‘s announcement that the value-added tax (VAT) will increase to 16% by the 2026/27 fiscal year. Most political parties have reject Finance Minister Enoch Godongwana’s proposed 0.5% increase.
Mbalula said the VAT hike doesn’t have to be permanent but many South Africans are skeptical.
Do you think VAT will hit 20% before 2029?
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