Build One SA (Bosa), one of the small parties that supported finance minister Enoch Godongwana’s fiscal framework bill, will table a VAT avoidance proposal to the ANC on Tuesday.
The party says it has identified more than R180bn in savings and new revenue that could be implemented in the short to medium term.
The plan includes cutting VIP protection for politicians, downsizing the cabinet, doing away with deputy ministers and reforming the cash-strapped Road Accident Fund (RAF).
Addressing journalists in Cape Town, Maimane said the Bosa proposals were aimed at raising money to avoid a VAT increase. They include the introduction of a 6% sin tax on online gambling to raise R65bn in new revenue annually.
Tension among government of national unity (GNU) partners, the ANC and DA in particular, is high after the passing of the fiscal framework, which contains a 0.5 percentage point VAT hike as part of the government’s revenue streams for 2025/26.
The Treasury opted for a half-percentage point hike in each of the next two years, with the proposed increases set to generate R13.5bn in revenue in 2025/26, R30bn in 2026/27 and R32bn in 2027/28.
Bosa and other opposition parties, including ActionSA, have been criticised by the EFF for supporting the fiscal framework. However, Maimane said rejecting it would have put “salaries at risk, delayed social grants and disrupted the functioning of schools and hospitals. That’s not leadership, that’s chaos.
“Second, our support came with clear, nonnegotiable conditions. Specifically, if the proposed VAT increase is not reversed, our support for the budget will be withdrawn. This was not a blank cheque. This was a responsible, conditional decision,” he said.
Bosa’s conditions include a reversal of the VAT increase and income tax bracket creep, a full review of government expenditure to identify where cuts can be made, and the adoption of a national growth charter to drive jobs and investment.
Bosa’s plan to plug the fiscal hole includes ending what he described as the “broken” employment tax incentive to free up R6.6bn.
In the medium term, R16bn could be saved from freezing middle and senior management hiring in government, while another R6.6bn could be saved from suspending bailouts to failing state-owned enterprises.
Maimane, who chairs parliament’s appropriations committee, said a “2% efficiency cut to bloated provincial bureaucracies” could net the GNU R15.3bn.
Cutting VIP protection for politicians and rationalising diplomatic missions could free up R3bn, reforming the RAF could save R20bn, and merging duplicative marketing agencies into a single trade and branding entity, said Maimane, could save R5bn.
Downsizing cabinet and eliminating deputy minister positions could bring R3.9bn into the kitty.
“SA doesn’t have a tax problem. It has a governance problem. And we will not allow struggling South Africans to pay the price for elite mismanagement by the GNU,” the Bosa leader said.
“We stand ready to work with all parties committed to a credible, inclusive, and growth-orientated budget. This is not a time for political theatrics. It is a time for bold ideas and responsible leadership.”
The DA took finance minister Enoch Godongwana and SA Revenue Service commissioner Edward Kieswetter to court last week over the VAT increase, which comes into effect on May 1.
The DA’s rejection of the fiscal framework could complicate the operations of government, given that the party would still be required to implement government policies that are informed by the budget in its ministries.
“We are not in the GNU for blue lights, or cars, or ministerial homes, or status,” DA federal council chair Helen Zille said after filing court papers against the VAT hike last week Thursday. “We are in the GNU for one sole purpose and that is to get SA’s economy to grow at the rate it needs to grow to absorb more people into productive employment and thereby reduce poverty,” she said.
The first part of the DA’s legal papers aims at having the process on April 1 in the parliamentary portfolio committee on finance declared null and void because it was “unprocedural”.
The second part, said Zille, is aimed at having section 7.4 of the VAT Act declared unconstitutional because “it gives the minister the power to enforce a VAT increase without taking it through parliament, and without the need to have the fiscal framework and other legislation required, passed in parliament”.
“It gives the minister legislative powers to pass laws simply by making a statement, and we know that is unconstitutional, and we want the court to declare it [as such].”
With Thando Maeko
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