NATIONAL NEWS - Cash-strapped South Africans breathed a collective sigh of relief upon waking up to the news that Treasury had decided late last night to scrap the contentious VAT hike set for 1 May.
Addressing the media this morning, DA Federal Council chairperson Helen Zille expressed her astonishment at Finance Minister Enoch Godongwana’s abrupt turnaround on the proposed 0.5% VAT increase he had been adamant to see through.
She also called out Godongwana’s claim that the late-night decision to abandon the VAT increase was based on consultations with political parties and careful consideration of the recommendations of the parliamentary committees, labeling it as ‘ludicrous’.
“The only event that changed the minister’s mind was the fact that the DA’s case against the illegal VAT increase was heard on Tuesday. Our excellent legal team made an excellent case,” Zille said.
The EFF, who had also contributed to the court case, helped expose what Zille termed an ‘unlawful exercise of public power’ by highlighting how the ANC had gained the support of smaller parties based on alleged deliberate deception.
Zille said it was important to expose the level of dupery taking place in South African politics, that in any other country would have caused a government of national unity to crumble.
She explained when the DA and the EFF refused to accept the proposed VAT hike, the ANC misled smaller parties to vote in favour of its fiscal framework, leading them to believe the VAT hike would be reconsidered.
This while Godongwana indicated just a week ago that the process to give permanent legislative effect to the 15.5% VAT rate on 1 May was already under way.
Finance Minister Enoch Godongwana. Photo: SourcedDespite the victory, Zille cautioned that the fight was not yet over. “We are not over the finish line yet. There is still a gap between the minister’s intention and the result,” she said.
Zille said at this stage, all they have is a verbal commitment from the minister to drop the VAT hike. She said they were expecting a formal settlement proposal. If the DA agreed to the contents of the proposal, it would seek to make it an issue of a court order.
She cautioned the ANC had the habit of not writing things down, not putting things on paper, never signing anything, and then doing as it pleased.
In addition, there would also need to be a settlement agreement with Parliament.
She said the DA’s court case would continue as part B of its court case centred on the legality of the finance minister’s sole powers to pass legislation.
In its view, Section 7(4) of the VAT Act is unconstitutional as it gives the minister power to do what only Parliament should be able to do.
Asked whether Godongwana should resign, Zille was careful not to call for his resignation outright.
She said, however, the fact that the minister refused to listen to suggestions from coalition partners and then had to be pushed back by the courts in itself should make him resign.
Not increasing VAT leaves an estimated revenue shortfall of R75b over the medium term.
Zille indicated in its quest to protect the poor from unaffordable VAT increases, the DA would now push hard for government to cut wasteful and corrupt spending, and not frontline services, as well as to root out ghost workers.
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