DA’s John Steenhuisen confirms disagreements over VAT among reasons for budget speech postponement

Democratic Alliance (DA) leader John Steenhuisen has confirmed that disagreements over a proposed value-added tax (VAT) increase were a major reason behind the postponement of Finance Minister Enoch Godongwana’s much-anticipated budget speech. Originally scheduled for 2:00 pm on Wednesday, the speech was delayed due to internal conflicts within the Government of National Unity (GNU).

Proposed VAT Increase Sparks Controversy

Reports suggest that Godongwana intended to propose a 2% increase in VAT, which would raise the rate from 15% to 17%. This potential adjustment sparked significant political pushback, particularly from the DA and other opposition parties, who are concerned about the impact on South African consumers already struggling with high living costs.

Speaking to reporters outside Parliament, Steenhuisen made it clear that his party would not support such a hike.

“VAT was of course one of the matters, and I think that has been played out in the media over the last few weeks,” Steenhuisen said. “It was obviously a key point for me if I wear my hat as the leader of my party. We couldn’t in good conscience support a 2% increase given the current economic circumstances in South Africa.”

John Steenhuisen

Economic Context

South Africa’s economy has faced significant challenges in recent years, with high unemployment, stagnant growth, and rising inflation exacerbating financial difficulties for many households. For these reasons, any increase in VAT is likely to be met with widespread public resistance.

VAT is a consumption tax applied to most goods and services, meaning it affects consumers across all income levels. While wealthier individuals may be able to absorb the increased costs, lower-income households—many of which already rely on social grants—are more vulnerable to the financial impact of higher taxes.

The DA’s stance against the VAT increase reflects broader public concerns about affordability and economic inequality.

Political Fallout Within the GNU

The proposed VAT hike also highlighted divisions within the GNU. As a coalition government composed of various political parties with differing ideologies, the GNU is prone to internal disagreements on major policy decisions, especially those with significant social and economic implications.

Finance Minister Godongwana has been under pressure to present a budget that addresses the country’s mounting debt, while also balancing social spending and economic recovery efforts. Increasing VAT would provide an immediate boost to government revenue but could come at the cost of public trust and political stability.

Steenhuisen’s Position

As the leader of the DA, Steenhuisen has been vocal about his party’s priorities, which include reducing government waste, combating corruption, and protecting vulnerable South Africans from additional financial burdens. His firm stance against the proposed VAT increase signals the DA’s intention to oppose measures they view as detrimental to the public, especially in an election year.

“Our focus is on ensuring that the South African people are not unfairly burdened,” Steenhuisen emphasized. “We believe there are other ways to address revenue shortfalls without resorting to increasing taxes.”

Next Steps

It remains unclear when the budget speech will be rescheduled. In the meantime, the government is expected to continue negotiations behind closed doors to find a resolution that satisfies all coalition members.

Observers are watching closely to see how the GNU navigates this latest political challenge. If no compromise is reached, it could lead to further instability within the coalition and erode public confidence in the government’s ability to manage the country’s economic future.

For South Africans, the postponed budget speech is more than just a political spectacle—it’s a critical moment that could shape the nation’s economic trajectory for years to come. With many households already stretched to their limits, any decision on VAT or other taxes will have far-reaching consequences.

As the debate continues, the public will be keenly awaiting updates, hoping for a budget that prioritizes relief and recovery over additional financial strain.