Minister in the Presidency Khumbudzo Ntshavheni has assured that finance minister Enoch Godongwana will deliver his budget speech on March 12 despite disagreements about his proposed 2% increase in VAT.
She told the media during the post-cabinet briefing on Thursday that a second special cabinet meeting was planned for Monday where proposals will be made on how government can cover the R60bn shortfall needed for this financial year.
Godongwana’s speech was postponed on February 19 minutes before parliament was set to hear from him, after the cabinet would not approve his plans.
TimesLIVE Premium reported this week Godongwana told cabinet during a special meeting on Monday a zero VAT increase budget would affect critical government programmes such as the Covid-19 social relief of distress grant President Cyril Ramaphosa wanted to extend.
The National Treasury had budgeted an additional R35.2bn for this programme running until March 2026 and R23.3bn for above-inflation increases to other social grants, including the child support grant, the old age pension and foster care grants.
Ntshavheni said there is a timeline the cabinet needs to comply with to conclude the budget process within the mandate of the cabinet.
She said rumours that cabinet had disagreed on the budget “are just that: rumours.”
While the GNU was made up of many parties, the ministers served at the pleasure of Ramaphosa to act collectively within the cabinet, she said.
“That has been made clear, to say nobody is bringing a party jacket. We are there to represent the interests of all South Africans. This mechanism has been put in place … so that you don’t have rumours. We are meeting again — there’s a special cabinet next week on Monday.
“It’s part of that process to finalise our part as cabinet and our input as cabinet, to then allow the minister of finance to do his part so there are no rumours that you pedal.”
TimesLIVE Premium also reported the DA allegedly pushed for Godongwana to look into increasing the fuel levy during Monday’s meeting, but this is said to have received a spirited pushback, especially from Ramaphosa.
Ramaphosa is believed to have proposed what is being referred to as a “middle ground” of having a VAT increase of between 0.5 and one percentage point.
“They told the caucus that either a 0.5 or one [percentage point] increase was more acceptable because taking it out altogether was impossible. The DA wanted the fuel levy increase, but we refused and said this one directly affects our poor people because they live far from their workplaces and an increase in the fuel levy means an increase in transport costs,” said a government insider.
“Our middle ground is the 0.5 to one [percentage point] VAT increase. Then we said he must go and look at housing bond taxes, taxing those earning upward of R800,000. We are suggesting those types of things, but we are not going to touch income tax. We will be taxing luxury goods because we are saying let’s look at the wealthy people first.”
TimesLIVE