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22 April 2025 | Story Terrance Molobela | Photo Supplied
Terrance Molobela
Terrance Molobela is a Lecturer in the UFS Department of Public Administration and Management.

Opinion article by Terrance Molobela, Lecturer in the Department of Public Administration and Management, University of the Free State.

 


 

Despite fierce opposition of the already passed National Fiscal Framework, the African National Congress (ANC) convened several meetings within and outside the Government of National Unity (GNU) mostly pioneered by its Secretary-General Fikile Mbalula who recently stated: “We are not trickers; we do not trick people. We engaged with ActionSA, and they said they do not want VAT; that’s not tricking anyone.”

One thing is clear, there is nothing binding on the GNU that after receiving additional budget proposals to raise revenue from ActionSA and Building One South Africa (BOSA), the VAT hike will be dropped. In fact, on 16 April 2025 in an interview with Newzroom Afrika the Minister of Finance Enoch Godongwana said: “I am not married to any increase or percentages”. The minister pointed out that the initial budget without VAT hikes was still on the table, however, he further highlighted that VAT increases remain Parliamentary policy issues. His advice is: “If you remove the 0.5% VAT increase, you must find an equivalent amount on the expenditure side to ensure the fiscal framework remains balanced.”

As the budget impasse stands, people need to understand that once the budget is passed by Parliament, the minister cannot unilaterally reverse the VAT increase. This is cemented by Section 12 of the Public Finance Management Act and Section 7(4) of the VAT Act. This ball is in Parliament’s court to reverse the budget and revenue proposal once alternative revenue generation proposal have been brought forward.

With 1 May 2025 looming, South Africans have a bitter pill to swallow as they will be charged R15.50% for every R100 spent. The media covered the VAT increase with rage and concerns from various communities across the country. The people feel punished by the GNU, while facing deep-rooted socio-economic problems like inequality, high unemployment, and poverty.

Despite the GNU deadlock and its fiscal crisis, several members within the ANC have unanimously admitted that the party has grossly failed to reach an amicable consensus within the GNU to freely support the VAT hike, hence it is vehemently opposed from all sides. Some critics suggest that the ANC-led government is poised to drop the VAT hike, but it’s unclear as to where and how the minister of finance would find the money to plug the fiscal gap.

 

Marriage may be sweet, but divorce is bitter

Both the ANC and DA knew ahead of time that forming the GNU with other parties was what is commonly known as “a marriage of inconvenience”. Before and on the wedding day, you both blind yourselves because of the sweet cake, joy, guests, and presents that long-lost friends will bring along. You create this beautiful picture that only exists in your head and hope that the other party shares a similar picture. But after you have entered the marriage, you then realise that you each functions on different levels and do not have complementary ideologies.

The DA’s ideologies on governance and policy is far the opposite of the ANC, and although it could work, the ANC have demonstrated their thirst for power and control, hence, their ability to share power equally remains a foreign language. DA leader John Steenhuisen has made it clear that they will not sacrifice citizens’ votes for a piece of cake but would rather fight and support a budget that caters for economic growth and job creation. This they have demonstrated by challenging the legality of the budget process in court, with hopes of blocking the implementation of a VAT increase, which has led to widening the rift within the fragile GNU.

 

The authenticity of the parliament – flawed budget process?

Amid mounting tensions created by the budget impasse, the National Assembly narrowly facilitated the national budget process, the DA, Economic Freedom Fighters (EFF), and uMkhonto weSizwe (MK) party rejected the budget, whilst the ANC-led government through coalescing outside GNU with parties like Action SA, secured majority support for the approval of the fiscal framework.

Parliament passed the 2025 National Fiscal Framework without the formal amendment of the mounting VAT and tax hikes. This was approved without binding recommendations, although budget committees suggested that the VAT and tax hikes be reconsidered at a later stage. As 1 May 2025 approaches for the VAT hike to kick in, reversing the VAT increase would be a lengthy process because it appears untenable.

The DA leader raised concerns that the Finance Committee acted ultra vires of the standing rules of Parliament, meaning the budget was not properly presented to the committee to reject or approve it, and that only a single proposal from the ANC was prioritised, whilst neglecting the DA proposal. This legal anomaly occurred under the watch of the National Assembly on the 2 April 2025. Hence, the DA have been challenging the budget.

One would ponder – “if the tables were turned, and the DA was in the position of the ANC and visa-versa, would the National Assembly opted to approve the budget framework?” I guess we would never know.

 

Where does the road lead now?

GNU: the ANC has already held several talks and meetings indirectly citing that the DA should hand over their divorce papers. But the president of the ANC needs the DA to remain in the coalition because of further economic shocks, which saw R1 trillion wiped out on the Johannesburg Stock Exchange (JSE). Investor confidence in the economy has hit rock-bottom, and the current trade wars have put pressure on multiple businesses to tighten their investment belts until it is safe to continue investing. The DA has not yet declared whether they want a divorce, but critics suggest that the Deputy President, Paul Mashatile, would be delighted if the DA left since they rejected the very same budget that they expect to reap from. As for ActionSA, it is unclear whether they have decided to join the GNU, but its leader Herman Mashaba has shown interest in joining the GNU, which most critics have weighed as a betrayal to the people of South Africa.

Ordinary citizens: It is time for South Africa’s citizens to brace themselves for the oncoming VAT hike. As much as the minister of finance has argued that it was necessary to stretch the already deeply embedded financial distress of citizens grappling with over-taxation of income, the bitter pill remains theirs to swallow. The 0.5% in VAT carries an underestimated distress for households who will be left alone to deal with increased prices of goods, services, and essentials.

 

What should be done thus far?

More tax on the people, goods and services kills jobs, which results in reducing revenue generation by government. To avoid further inflationary hikes, the government needs to approach the problem in an unusual way – this means placing strict rules and regulations on any government transaction that takes effect, deal with corruption and mismanagement at every sphere of government. Monies lost and stolen through unfinished projects should be recovered and ensuring that all state projects remain frequently monitored.

The government needs to change its ways of approaching industries, companies, and businesses to create jobs, and transfer some of their skills to the people of South Africa. The youth is yearning to be seen, supported, trained, and placed into the real world to unleash their potential, which might be something the economy needs to re-establish and position itself in the right direction to stir desired economic growth.

 

News Archive

Statement by Judge Faan Hancke, Chairperson of the Council of the University of the Free State (UFS)
2008-03-08

The Council of the University of the Free State today (Friday, 7 March 2008) unanimously condemned the offensive and racist Reitz video in the strongest possible terms.

Council further labeled the video as an insult to women, to older persons and to poor working people who are defenseless and vulnerable and expressed its disgust at the action of the students concerned.

Council also apologised unreservedly and sincerely to the five UFS employees who were shown in the video and offered all emotional and counselling assistance necessary as well as in the current criminal matter under way or possible civil action they may undertake.

At the same time the university must also provide counseling to current first year students of Reitz who were not present at the time of the filming of the video.

Council also mandated the management, in addition to the other disciplinary steps under way, to consider the possibility of closure and of conversion of Reitz into a beacon of transformation, hope and liberation (either as a residence or in some other form).

This must take place in accordance with due process of the law to give residents and other stakeholders reasonable opportunity to make submissions so that all relevant considerations can be taken into account.

The Council expressed its full confidence in the management and supported the steps taken by management thus far under trying circumstances concerning transformation, residence integration, the Reitz video and the vandalism of the campus.

It reaffirmed the decision taken in June 2007 to increase diversity in student residences and recommitted the UFS to implement the policy.

The Council condemns all forms of racism and committed itself to eradicate racism and racial prejudice in any form and from any quarter on the UFS campus.

The meeting also approved the appointment of an external expert agency to assist the university in:

  • understanding and identifying the current challenges relating to the implementation of the integration policy 
  • supporting the university management and making recommendations on how to enhance the process of implementation

The intention is to provide additional capacity to the management in order to accelerate the transformation and integration process.

It called on management to take firm action against any staff or student who violates the law, is involved in threats, racism, disruptions, intimidation and vandalism and condemned these actions in the strongest possible terms.

The Council reassured all staff, students, parents and other stakeholders that firm action will be taken against persons who are guilty of disorderly conduct, intimidation, disruption or similar actions with the full force of the law.

The management was requested to maintain law and order so as to create a conducive environment in which academic excellence can be furthered. The Council appreciates the steps that have been taken in this regard.

The Council supported a management initiative to investigate the fundamental issues underlying many of the current problems in residences, including:

  • residence culture, including initiation, as well as race, racialism and racism
  • alcohol and drug abuse role,
  • place, organisation and management of residences constitution of student structures
  • and the role of political parties in student politics and structures
  • the physical structure of residences as part of a campus accommodation strategy

The Council agreed that social cohesion and racial tolerance will be highlighted as a strong theme in the academic cluster initiatives of the UFS and that management should find additional ways to strengthen existing programmes regarding diversity on the campus among all staff and students.

The Council called on all stakeholders to honour the high values of the Constitution of the country, to maintain these values and to further them in an orderly and peaceful environment.

Media Release
Issued by: Anton Fisher
Director: Strategic Communication
Tel: 051 401 3422
Cell: 072 207 8334
E-mail: fishera.stg@ufs.ac.za
7 March 2008

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