Major political party wants Finance Minister Enoch Godongwana gone

The MK Party is calling for Finance Minister Enoch Godongwana’s resignation over his handling of the value-added tax (VAT) matter.

The party has formally submitted a motion of no confidence in the Minister of Finance to the Speaker of the National Assembly.

Last week, the National Treasury announced that Godongwana would implement measures to reverse South Africa’s planned 0.5 percentage point VAT increase.

The value-added tax (VAT) increase was scheduled to take effect on 1 May 2025. However, it faced fierce resistance, including legal cases from the DA and EFF.

The National Treasury announced that Godongwana will introduce the Rates and Monetary Amounts and the Amendment of Revenue Laws Bill (Rates Bill).

They will propose maintaining the Value-Added Tax (VAT) rate at 15% from 1 May 2025, rather than the proposed 15.5% announced in the 2025 Budget in March.

“The decision to forgo the increase follows extensive consultations with political parties, and careful consideration of the recommendations of the parliamentary committees,” it said.

By not increasing VAT, estimated government revenue will fall short by around R75 billion over the medium term.

As a result, the finance minister has written to the Speaker of the National Assembly to indicate that he is withdrawing the Appropriation Bill and the Division of Revenue Bill.

This action is needed to propose expenditure adjustments to cover this shortfall in revenue in the 2025 Budget.

Parliament will be requested to adjust expenditures to ensure revenue loss does not harm South Africa’s fiscal sustainability.

Another change is that the measures to cushion lower-income households against the VAT increase will also be withdrawn, and other expenditure decisions will be revisited.

Simply put, the additional food items which were set to be zero-rated will now remain exposed to the current 15% VAT.

“To offset the unavoidable expenditure adjustments, any additional revenue collected by SARS may be considered for this purpose going forward,” the National Treasury said.

The Minister of Finance expects to introduce a revised version of the Appropriation Bill and Division of Revenue Bill within the next few weeks.

MK Party tables motion of no confidence against Finance Minister Enoch Godongwana

The MP Party has formally submitted a motion of no confidence in the Minister of Finance to the Speaker of the National Assembly.

“This action underscores our commitment to holding those in positions of public trust accountable for decisions that impact the lives of millions of South Africans,” it said.

“Minister Godongwana’s failure to provide clarity and leadership on the VAT issue has caused confusion in the markets.”

It added that the VAT debacle caused panic among the poor and small businesses and further entrenched uncertainty in an already fragile economy.

It said the Minister ignored advice to introduce wealth taxes or raise taxes on luxury consumption, opting for the regressive option of increasing VAT.

The MK Party said it is a measure that disproportionately punishes the working class, the unemployed, and the poor majority.

On Thursday, Godongwana told Reuters he would not resign after backtracking on the government’s planned VAT hike, despite opposition calls for him to quit.

“My job is to introduce money bills – nothing says they must be popular,” he told Reuters on the sidelines of the International Monetary Fund and World Bank spring meetings in Washington.

In a related development, the Democratic Alliance filed a supplementary affidavit with the Western Cape High Court.

This was necessary because, despite the developments this week, the VAT increase will still take effect on 1 May 2025, unless the court issues an order to prevent it.

The Fiscal Framework, including the VAT increase, was adopted by the Finance Portfolio Committee on 1 April and then by Parliament on 2 April.

Therefore, only a court order can now stop the 0.5 percentage point VAT increase from coming into force on 1 May 2025.