The adoption of the Fiscal Framework and Revenue Proposals in the National Assembly was preceded by an intense debate, with the proposed value-added tax (VAT) being the main dispute among political parties.
The debate on the Standing Committee on Finance’s report was delayed by almost an hour after some political parties raised objections and asked the Speaker to postpone the debate, citing what they called a legally flawed process followed by the committee in adopting the report.
However, the Speaker of the National Assembly, Ms Thoko Didiza, ruled against the points of order and allowed the debate to proceed. Dr Joe Maswanganyi, the Chairperson of the Standing Committee on Finance and ANC representative, opened the debate by tabling the committee report. In his opening remarks he outlined that the committee had followed due process and that the report was a result of an extensive consultation process.
He told the National Assembly sitting that the committee was briefed by the Minister of Finance and the Commissioner of the South African Revenue Service (SARS) and also received presentations from the Financial and Fiscal Commission (FFC) and the Parliamentary Budget Office (PBO). The committee also received 51 submissions from ordinary members of the public on the 2025 Fiscal Framework and Revenue Proposals.
In considering 2025 Fiscal Framework and Revenue Proposals, the Chairperson said the committee adopted the report with recommendations, including a call for the Minister of Finance to give explain what the government will do to mitigate the impact of the VAT increase.
The uMkhonto weSizwe Party (MKP) rejected the report and accused National Treasury of ignoring key inputs made during public participation on the Fiscal Framework and Revenue Proposals. MKP Member of Parliament Mr Des van Rooyen told the House that the recent budget process has shown that the National Treasury does not respect public participation democracy.
“The National Treasury was advised by both the FFC and PBO not to increase VAT as this will worsen the hard living conditions endured by the poor, this advice was ignored even when it was reiterated by MPs serving in the finance committee. Of the 51 public submissions only two supported VAT increase, the rest objected and still National Treasury refused to listen,” said Mr van Rooyen.
The Democratic Alliance, through its MP Dr Mark Burk, accused Parliament of failing to exercise its powers to amend the budget in terms of the Money Bills and Related Matters Act and the Constitution. “Parliament has powers to amend bad budgets, in terms of the Money Bills and the Constitution but that chance was squandered in the committee by ActionSA, the IFP and the ANC. They sold out the voters by enabling a budget that is antipoor, anti-growth and anti-job creation; we reject the report,” said Dr Burke.
Representing the Economic Freedom Fighter in the debate, Ms Omphile Maotwe also rejected the report and argued that it was adopted in a chaotic committee meeting that failed to follow legal procedure. The EFF also wants an increase in corporate income tax and introduction of new forms of wealth tax, increased funding of SARS and giving PBO and FFC the mandate to recalibrate the budget.
Mr Nhlanhla Hadebe of Inkatha Freedom Party said they were about continuing wasteful and irregular expenditure and called for the strengthening of oversight mechanisms to curb corruption and mismanagement. “We must realign expenditure priorities to ensure increased investment in healthcare, education and job creation initiatives, and greater fiscal support for SMMEs as engines of economic growth and employment,” Mr Hadebe said.
On the VAT increase, he warned that any increase in taxation should be carefully assessed to avoid discouraging investment and burdening households. “We need to enhance revenue collection through improved tax compliance, efficiency in tax administration and encourage private sector partnerships to lighten fiscal pressure while stimulating investment,” he proposed.
Patriotic Alliance Leader and Minister of Sport, Arts and Recreation Mr Gayton McKenzie said: “The budget contains hopes and plans that there would be more police to fight crime, more jobs for the people. We commend the minister for moving from the initial two percentage point to 0,5.”
The Freedom Front Plus also objected to the proposed VAT increase with representative Mr Wouter Wessels saying it was not a desirable decision. “Adopting this fiscal framework, which still provides for an increase in VAT, is not acceptable. We could have amended the budget. For too long, Parliament has functioned as a rubber stamp when it comes to the budget. In the past, what was tabled was just passed and implemented – times are changing. We have the power to amend the fiscal framework and make it better,” argued Mr Wessels.
Mr Athol Trollip of ActionSA said: “We are fiercely opposed to VAT increase and the personal income tax bracket creep. We remain committed to shielding ordinary South African from unnecessary and unjust tax hikes. “We chose to recommend changes to the fiscal framework because an outright amendment would have required the Minister to redo the entire budget process and caused more delays.”
Mr Trollip said this approach allows for the necessary time to table alternative revenue proposals and most importantly to gazette a postponement of the VAT increase without triggering a full budget revision.
The African Christian Democratic Party also raised its concerns about the process followed for the committee report, particularly from a legal perspective. Mr Steve Swart believes that legal opinion should have been obtained given the fact the matter would likely end in court. The party also rejected the proposed VAT increase and said cash-strapped South Africans cannot afford any tax increase.
Mr Nqabayomzi Kwankwa of the United Democratic Movement said the current situation should serve as an important lesson for Parliament and National Treasury. He is of the view that consultation should have started as early as last year at the beginning of the budget cycle to reach compromises. “It is easy to say we don’t want tax increases but where are we going to get the alternative revenue sources? We are only delaying the inevitable; a decision has to be made to plug the revenue shortfall,” he said.
Mr Songezo Zibi of Rise Mzansi believes the current situation was a result of government wasting trillions of rand that it borrowed from international agencies. “And if we borrow more it will be irresponsible. Taking more debt will be a burden for future generations. We must make our choices within the money that is available,” he said.
Build One South Africa (BOSA) leader Mr Mmusi Maimane said further delaying the budget would have negative impact on the economy. “It is not an easy decision, but we are required to take a responsible decision that will serve the people of South Africa. It is not a choice between good and bad but between worse and much worse. This is not a good budget, otherwise all of us would have accepted easily,” he said before declaring his party’s support for the report.
Ms Thandiswa Marawu of the African Transformation Movement said, the ATM is against raising any taxes in the current economic climate, as it will place an additional burden on already struggling households and businesses. “Increasing taxes will only stifle economic growth, discourage investment and further push vulnerable communities into financial distress. Instead of extracting more from taxpayers, the government must cut out wasteful expenditure and eradicate corruption,” she said.
Mr Ganief Hendricks of Al Jama-ah commended the Minister of Finance giving an above inflation increase to pensioners, children and people with disabilities despite the difficult fiscal constraints. He also welcomed the 30-day breather for the implementation of VAT increase.
The National Coloured Congress’ Mr Fadiel Adams: “It is impossible for anybody with a conscious to support this report. It is dehumanising to pass the flops of the government to the poor. It is not true to say the increase in VAT is 0,5 percentage points, the truth is that it is 6% in over two years.”
The Pan Africanist Congress of Azani also joined the list of the political parties that supported the report. “We believe prioritising spending on the poor, providing basic needs such as food, housing, water and electricity is the correct approach. Our people expect a budget that speaks to the needs of the majority. We call for improvement in tax collection, before increasing the burden on the taxpayers,” said party leader and Minister of Land and Rural Development Mr Mzwanele Nyhontso.
The United Africans Transformation leader Dr Lehlohonolo Mahlatsi rejected the report and said the budget was not aligned with the developmental needs of the country, exacerbates economic inequality and serve the interests of the capitalist at the expense of the poor working class and the marginalised. “A nation’s fiscal policy should be designed to stimulate inclusive economic growth, reduce inequality and promote industrialisation, particularly in a country like ours. An increase in VAT will achieve the opposite,” said Dr Mahlatsi.
Ms Patricia de Lille of the Good Party: We commend the increase in allocations to education, infrastructure and the retention of the Social Relief of Distress, we also welcome the committee recommendation that the SRD grant must be converted into a basic income grant.”
In closing the debate, the Minister of Finance Mr Enoch Godongwana accused the MPs of focusing on one side of the equation which is revenue and ignored the spending side. “Had we looked at the spending side, what is being funded, those who talk about the poor will understand that a major part of this budget is targeted to poor communities,” said the Minister.
At the end of the debate, the report was put to a vote and was passed; 194 MP voted in support and 182 against.
Sakhile Mokoena
5 April 2025
Arrange a tour