The political response has been swift following National Treasury’s late-night decision to withdraw its proposed Value-Added Tax (VAT) increase, originally set to take effect on 1 May. The controversial hike, which would have raised VAT by 0.5 percentage points, has now been scrapped — prompting both praise and criticism from across the political spectrum.
The African National Congress (ANC) has welcomed the move, calling it a victory for public engagement and democratic accountability. In a statement, the party said the reversal underscores the importance of a more transparent and inclusive approach to national budget planning.
“This moment has taught us two critical lessons,” the ANC noted. “First, there must be broader consultation when it comes to how the country allocates its resources. Second, putting aside political differences can yield meaningful solutions for the people of South Africa.”
The party also expressed concern that the proposed VAT increase had distracted from the budget’s more positive elements, including increased funding for social welfare and infrastructure development.
Meanwhile, the Democratic Alliance (DA) has attributed the reversal to mounting legal pressure. At a media briefing on Thursday, DA federal chairperson Helen Zille said Finance Minister Enoch Godongwana likely acted on legal advice suggesting the court challenge to the VAT hike would succeed.
“It seemed wiser for the minister to back down voluntarily, rather than appear to have been forced by the courts,” said Zille.
The Economic Freedom Fighters (EFF), which also challenged the VAT hike in court, has taken a more aggressive stance — calling for the immediate resignation of both Minister Godongwana and Treasury Director-General Dondo Mogajane. The party argues that the 2025 Fiscal Framework was adopted unlawfully and must be revisited in full.
Godongwana is now expected to present a revised Appropriation Bill and Division of Revenue Bill in Parliament in the coming weeks, as government scrambles to realign its fiscal strategy following the projected R75 billion shortfall created by the VAT reversal.