The ANC has joined ActionSA in its proposal to amend the fiscal framework on condition that National Treasury come up with alternative revenue proposals to the VAT increase within 30 days.
The proposal made before parliament’s two finance committees on Tuesday was to accept the fiscal framework on this condition.
The DA made a counter-proposal that the fiscal framework be amended to exclude the one percentage point VAT increase over two years and that revenue and expenditure estimates be amended accordingly.
Both proposals involve amendments to the fiscal framework.
In terms of the law, finance minister Enoch Godongwana must be given two days to respond to any proposed amendment of the fiscal framework by the committee.
That would require a postponement of the scheduled vote on the framework in the National Assembly on Wednesday.
The committee has not decided what its final decision is as its deliberations are ongoing.
The proposal by ActionSA MP Alan Beesley also included that the May 1 VAT increase of 0.5 percentage points be scrapped. However, the law provides that the VAT increase and the date of commencement will take effect as announced by the minister of finance unless parliament passes a law annulling the announcement.
MPs from the EFF and MK, which oppose the VAT increase, rejected Beesley’s proposal. They said the law did not allow for a conditional acceptance of the fiscal framework, but required that the finance committee either accept or amend the fiscal framework.
Dennis Ryder, a DA member of the select committee of finance in the National Council of Provinces, agreed there was no legislative provision for conditional acceptance.
The EFF said Treasury had had ample time to consider alternative revenue proposals and “no miracle will happen in 30 days”.
Beesley’s proposal was that “the fiscal framework tabled by the minister of finance is amended and it is recommended that National Treasury facilitates the receipt of substitute revenue proposals, together with corresponding expenditure savings, that will form the basis of an alternative revenue proposal instead of:
a) the proposed 0.5 percentage point increase in VAT (VAT) for the 2025/26 financial year, effective 1 May 2025, in respect of which the committee has expressed serious concerns; and
b) the failure to adjust personal income tax brackets in line with the higher of the actual CPI inflation rate for 2024 or the projected CPI inflation rate for 2025 to prevent bracket creep.
“Furthermore, the committee recommends that the alternative revenue proposals and expenditure savings to balance the R28bn shortfall — which must effectively suspend the proposed increases — be finalised and submitted to the National Treasury to process and submit to the committee within 30 days for consideration and adoption of this report by the house.”
Beesley said by considering these options, the government could achieve fiscal consolidation without worsening inequality or placing undue financial strain on citizens.
DA finance spokesperson Mark Burke proposed that the committee amend the fiscal framework to reduce consolidated revenue for 2025/26 by R13.5bn and to reduce consolidated revenue for 2026/27 by R29.844bn and for 2027/28 by R31.616bn.
Burke proposed that “this committee amends the revenue proposals to reject the 0.5 percentage point VAT due to begin on May 1 2025 as well as the additional increase proposed for 2026/27 thus bringing the proposals in line with the revenue amount in the amended fiscal framework”.
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