Thursday | February 20, 2025
In a dramatic turn of events, South Africa’s Minister of Finance Enoch Godongwana failed to table the 2025/2026 government budget in parliament which was scheduled for Wednesday, Feb. 19, 2025.
The Speaker of the National Assembly (NA) Toko Didiza announced in full glare to the members of parliament in Cape Town just a few minutes after 14h00, the time for the delivery of the anticipated speech.
At the center of a no show by Godongwana is the purported 2% percentage point increase on value added tax (VAT) from 15% to 17%. This hike upset parliamentarians and suggested it should have been presented and debated in the NA
Therefore, the Minister will have another attempt on Mar. 12, 2025 after which President Cyril Ramaphosa assured the nation on Thursday that it will be reviewed. Ramaphosa underscored the difficult choice between increasing taxes and borrowing.
However, Dawid Roodt, Chief Economist of the Efficient Group, said on Newzroom Africa that the Minister can reduce government spending to avoid VAT hike. He stressed that the SA government has reached the end of the runway in taxing their way out of financial trouble with increasing state debt.
The Democratic Alliance (DA) leader John Steenhuisen said they opposed the budget notwithstanding his party being in a coalition government with the African National Congress (ANC).
On that score, ANC entered into the United front with several political parties in the country after securing majority votes for the first time since 1994
The collapsed budget Speech is unprecedented in South Africa. The ANC managed to pass legislation and got policies through without being scuppered.
But the political climate has changed now. Currently, it means it has to consult for every decision it makes, a change in practice and culture they are not accustomed to.
Even so, it seems the Minister’s office had resolved to steam ahead with the speech even though there was no consensus. This is so because there were other members of parliament who knew about the deferring of the Finance Minister’s speech but they were present in the NA.
Therefore, it is inexplicable why the delivery of the budget speech was not postponed before the tabling day to, at the very least, save costs and time.
Is it possible that perhaps Godongwana expected a change of heart from the coalition partners or received a call from The Presidency to go ahead?
And when the hours for the schedule tabling of the national fiscal plan approached, Godongwana got wind of the tense mood of ANC’s alliance partners in government that they were not going to support this grand plan and, thus, he got cold feet and folded.
Nevertheless, Godongwana appeared in a press briefing soon after the NA disbanded only to confirm that there were disagreements among cabinet ministers about the tax related issues and will be ironed out before Mar. 12, the new budget speech date.