The African National Congress (ANC) has endorsed ActionSA’s proposal to scrap the planned 0.5% VAT increase, aiming to provide relief for taxpayers already facing economic strain. ActionSA introduced an amendment to remove both the VAT and income tax increases proposed for the 2025/2026 fiscal year during a parliamentary joint committee on finance debate on April 1, 2025.
ActionSA representative Alan Beesley confirmed that discussions held on March 30, 2025, between the parties were focused on shielding citizens from further financial pressures and addressing declining service delivery. He emphasized the necessity of the amendment to protect household incomes from unnecessary tax burdens amid growing economic challenges. “Given the imperfect state of the proposed budget and the current uncertainty created by the Government of National Unity (GNU), which could have catastrophic economic repercussions if left unresolved, ActionSA chose to prioritize urgent taxpayer protections over broader reforms,” Beesley stated.
He further explained that ActionSA had offered feasible alternatives to cover any revenue gaps, demonstrating that avoiding tax hikes was both feasible and essential without resorting to political gamesmanship. Meanwhile, the Democratic Alliance (DA) remains firm in its opposition to the budget proposal. DA leader John Steenhuisen voiced concerns on social media, accusing the ANC of jeopardizing the GNU by refusing to finalize agreements on economic growth and spending reforms.
Steenhuisen warned that the DA would continue opposing the budget unless a concrete, written agreement is established. The stalemate highlights significant tensions within the GNU, raising concerns about the stability of South Africa’s governance and economic direction.
ActionSA celebrates a major victory in its ongoing fight for a fair and responsible fiscal framework that protects every South African from excessive taxation and worsening economic pressures. The party moved a recommendation in the report that ensured the proposed 0.5 percentage point increase in Value-Added Tax (VAT) for the 2025/2026 financial year has been effectively scrapped, along with income tax bracket creep.
Consequently, it will be the responsibility of Parliament, together with National Treasury, to urgently finalize alternative revenue and expenditure proposals within 30 days. This marks a critical step in protecting South Africans from regressive and unsustainable tax increases. From the outset, ActionSA has firmly opposed the proposed VAT hike, recognizing its disproportionate impact on lower- and middle-income households already struggling with the cost-of-living crisis.
Furthermore, the failure to adjust personal income tax brackets in line with inflation would have subjected taxpayers to bracket creep—an unjust stealth tax that erodes disposable income. Through recommendations in the Finance Committee’s report, which will proceed to the National Assembly, ActionSA has ensured that substitute revenue proposals and corresponding expenditure savings are considered to offset the R28 billion shortfall from scrapping the tax increases.
ActionSA will always put South Africans first. As the only constructive opposition in Parliament, it will continue to engage in providing practical solutions that advance the best interests of South Africans at every turn. The party remains focused on cutting wasteful expenditure, curbing corruption, and prioritizing service delivery over reckless tax increases.
Political parties have been meeting to find common ground on the 0.5 percentage-point VAT increase proposed by Finance Minister Enoch Godongwana in his revised Budget speech last month. On April 1, 2025, ActionSA confirmed a meeting with the ANC on March 30 to discuss the approach to the 2025/2026 national Budget.
ActionSA's Alan Beesley reiterated that the party would not compromise on the proposed VAT increase. “The final explicit requirement for ActionSA's strict conditional support of the budget is the removal of the VAT increase, and the lack of an inflation-based adjustment to income tax brackets,” he said.
This statement comes as the ANC scrambles to secure the backing of other political parties to pass the Budget on April 2, 2025. This follows the ANC's largest GNU partner, the DA, rejecting Godongwana's proposed VAT increase in his revised Budget speech.
President Cyril Ramaphosa and DA leader John Steenhuisen are currently locked in discussions over the Budget deadlock. Last week, reports indicated that ActionSA would not support the Budget, removing six potential votes needed by the ANC to pass it in the National Assembly. The six votes would help the ANC get the Budget to the 50% plus one mark required for it to pass.
ActionSA also met with the ANC on March 28 to listen to proposals. Beesley stated that ActionSA had put forward viable alternatives to cover the revenue gap and protect South Africans from unnecessary tax hikes. He concluded the meeting with the ANC on the understanding that the party's strict conditions would be supported in a manner that ensures the finance committee's report would direct the finance minister to remove tax increases.
Time is running out for the ANC, as it refused to finalize an agreement on growth and spending reforms, imperiling the GNU. John Steenhuisen tweeted, "The DA will oppose the budget unless and until a written agreement is reached." He added that it is clear the ANC has engaged with ActionSA while simultaneously engaging other political parties, both within and outside the GNU.
One ANC leader suggested that if the DA were to leave the GNU, it could lead to a reconfigured coalition, with ActionSA potentially stepping in to fill the gap. They noted that the GNU currently has 287 of the 400 MPs, and if the DA were to exit, ActionSA could help bring the numbers back up to a workable majority.
As this story develops, the political landscape in South Africa remains fraught with uncertainty. The actions taken by these parties will have lasting implications for the governance and economic stability of the nation. With the budget proposal hanging in the balance, all eyes are on the ANC, ActionSA, and the DA as they navigate these turbulent waters.
