Finance Minister Enoch Godongwana will deliver the Medium-Term Budget Policy Statement (MTBPS) on Wednesday, the second under the Government of National Unity (GNU), but the first fully owned by the coalition.

This follows the drama surrounding this year’s budget, which was delayed until May after a court challenge by opposition parties, including the Economic Freedom Fighters (EFF), over the proposed VAT increase.

Following South Africa’s exit from the Financial Action Task Force (FATF) Grey List, South Africa must now target the seemingly more difficult task of exiting junk status.

Two months ago, Fitch affirmed South Africa’s long-term foreign and local currency debt ratings at ‘BB-’ and maintained a stable outlook.

According to Fitch, South Africa’s credit rating is constrained by several factors, including low real GDP growth, high poverty and inequality levels, a high and rising government debt-to-GDP ratio among other.

“However, the ratings are supported by a favourable government debt structure with long maturities and mostly local-currency-denominated, strong institutions and a credible monetary policy framework,” Treasury said at the time.

Godongwana will now have to show that he has regained full control of the budgeting process and enjoys the buy in of the ten parties in the GNU.

One way to achieve this is to avoid any major baseline spending adjustment, unless its boost areas of spending such as education, health and social welfare.

However, given South Africa’s ongoing fiscal consolidation path since the COVID-19 pandemic, such moves are highly unlikely and would likely face strong resistance from the pro-market Democratic Alliance (DA), a major GNU partner.

The first issue that Godongwana will address is economic growth.

According to the Nedbank Economic Unit, “treasury will likely reduce its GDP growth forecast for 2025 slightly due to shrinking fixed investment and lower exports in the first half of the year.”

The decline in fixed investment should be a major worry for government.

Nedbank goes on to note: “For the next three years, we expect Treasury will reflect an upward trajectory as subdued inflation and lower interest rates sustain consumer spending and easing energy and logistical constraints enable a recovery in fixed investment, offsetting the continued, and potentially deepening, drag from net exports.”

A piece of good news expected to come from the budget is higher tax collection than at the time of the main budget.

The boost is due slightly faster growth in domestic demand, elevated gold and platinum prices, with the former reaching $4 000 an ounce, as well as the ever-efficient tax collection machine that is the South African Revenue Service (SARS).

Nedbank expects revenue to be R60 billion higher and R200 billion higher over the medium term.

A moderate growth in spending following the delayed budget but also low inflation in the years ahead means that South Africa can expect a narrower deficit.

A major issue Godongwana will have to address is that of infrastructure spending.

The government plans to invest R1 trillion in infrastructure over the next three years.

But too often, especially with government owned infrastructure projects, the figures sound like ambitious targets that are not followed through.

Godongwana must disclose how much of planned spending of the past three years materialised.

Actual, not planned, spending is what causes growth and creates job.

Godongwana will then have to respond to a myriad of issues, such as what will happen to the Social Distress Relief Grant (SDRG) after March next year.

The higher-than-expected tax revenue may create room to extend the grant, which was introduced during COVID-19 but has since grown to be an entrenched part of the social fabric due to high unemployment and poverty.

Lastly, the minister is expected to provide an update on discussion with the South African Reserve Bank (SARB) around a new inflation target.

Godongwana will most likely give an update on Treasury’s thinking, since the Reserve Bank’s stance is well known, with the final announcement only expected in next year’s budget, hopefully in February, when South Africa will mark 26 years since the adoption of the inflation target.

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South Africa’s parliament passed the budget’s fiscal framework and revenue proposals on Wednesday, removing a key pillar of uncertainty for investors in Africa’s biggest economy.

The budget has been caught up in political wrangling for months and had to be reworked twice because of disagreements in the coalition government over plans to raise value-added tax (VAT).

A majority of 268 lawmakers in the lower house, including from the two biggest political parties, the African National Congress (ANC) and the Democratic Alliance (DA), voted in favour of the budget’s overall spending limits and revenue-generating measures.

Eighty-eight lawmakers voted against and two abstained.

South Africa had not experienced contested budget votes in the post-apartheid era until this year, as the ANC always had a parliamentary majority which made the votes a formality.

It lost that majority in an election last year, entering a coalition with the DA and other smaller parties.

The ANC and the DA had been at loggerheads over this budget until the finance minister backtracked on the proposed VAT hike. The two parties have more than half of the lawmakers in the 400-member National Assembly.

Before Wednesday’s vote, Finance Minister Enoch Godongwana told members of parliament that the tax increases that remained in his third budget version were aimed at funding social services like health and education.

The DA said it supported the fiscal framework partly because it focused on infrastructure and contained spending reforms.

Godongwana has tried to strike a balance between maintaining spending on frontline services and stabilising public debt levels, a worry for credit rating agencies.

Parliament still has to approve two other pieces of legislation, the division of revenue bill and the appropriation bill, for the budget to be entirely passed.

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The Economic Freedom Fighters has lodged an urgent application with the Western Cape High Court to stop Finance Minister Enoch Godongwana from implementing the fuel levy increases of 16 cents per litre on petrol and 15 cents per litre on diesel.

These hikes, announced in the 2025 Budget Speech, are scheduled to take effect on 4 June.

The party argues that the increase, announced through a government notice rather than through a money bill, violates the Constitution and the Money Bills Act.

The EFF notes that since the levy is a national tax, any change needs to be announced through a money bill and revenue proposals, rather than a Government Gazette, as if it is a regulatory change. Announcing the increase through a money bill would subject it to parliamentary scrutiny, including public hearings as well as parliamentary vote.

“We took this action after repeated efforts to caution the minister and appeal to his conscience failed. We wrote to the minister, urging him to consider the impact of this increase on the poor and working-class people of South Africa, especially during a time when the cost-of-living crisis is deepening,” said EFF spokesperson Sinawo Thambo said in a statement on Thursday.

According to Thambo, Godongwana was pressing ahead with the fuel levy hike despite clear warnings and the recent rejection of VAT increase by both Parliament and the public.

Thambo further contends that the same constitutional, economic and procedural flaws that led to the VAT hike defeat also apply to the fuel levy.

He criticised political parties and stakeholders in the 2025 Fiscal Framework hearings for failing to recognise these issues in the proposed increase.

“This matter is urgent not just because of its legal implications, but because the fuel levy directly affects the price of transport, food and other essentials. Any increase will hit the poorest the hardest,” he added.

Thambo warned that implementing the fuel levy increase without passing a money bill could jeopardise the legality of the entire national budget.

He cautioned that if the courts later found the process unlawful, it could happen after significant public funds have already been spent, risking a constitutional crisis.

Such a scenario, he said, would undermine Parliament’s authority, weaken financial accountability and have severe repercussions for service delivery and public trust in government institutions.

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In the end, Finance Minister Enoch Godongwana had to make do with what limited tools and funds he has.

In an unprecedented budget cycle, he had an impossibly wide range of demands to satisfy, starting with the handful of parties that chose to renegotiate with him, and pressure from the two, the DA and EFF, that headed to court to fend off the VAT increase. 

With the scrapped VAT increase creating a R65 billion revenue hole over the medium term and faced with weak economic growth and little room to borrow more, Godongwana had to increase the general fuel levy for the first time in three years.

He also raised sin taxes above inflation, and pinned his hopes that the SA Revenue Service collects R20 billion more and economic reforms pay off. SARS will receive an additional R7,5 billion over the medium term.

Treasury now forecasts GDP to grow by only 1.4% in 2025, down from 1,7%. But even that feels optimistic in the wake of US President Donald Trumps’s tariff storm. 

Economic growth may fail to reach 1%, just as it has over the past two years 

“Alongside structural economic reforms, sustainable fiscal policy will cushion the economy from shocks and lay the foundation for future prosperity,” Treasury says hopefully.

An analysis of the data shows that there was a R19,1 billion shortfall in revenue compared with the budget 2024 projections.

This was due to two main factors. The first was the unintended consequence of a push to renewables as both Eskom and the private sector needed less diesel to power generators as they got electricity from wind and solar plants.

The second factor was that fixed investment swung to a 3.6% contraction in 2024 compared with a projected increase of 3.7% in the 2024 budget. This meant that instead of imports increasing by 1.9%, they in fact fell by 5.3%, which reduced import duties and VAT.

“This is not an austerity budget,” Godongwana was at pains to point out on Wednesday.

“It increases non-interest expenditure by an average of 5.4% over three years. In real terms, this is 0.8% growth,” he said.

He argued that it was also a “redistributive budget” as it directed 61 cents of every rand of consolidated, non-interest expenditure towards the social wage.

“This is money that will be spent to fund free basic services like electricity, water, education, healthcare, affordable housing, as well as social grants for those in need.” he said to mild applause.

Godongwana pointed out that he has only cut the planned increase in spending, not actual spending.

Instead of adding R232 billion over the next three years, he would now add R180 billion.

With the VAT increase gone, the first to go was widening the net of zero-rated goods. Godongwana kept the old age grant increase of R130 by October this year, which was ostensibly put in place to cushion the blow of the VAT hike.

The civil service package and its sweetener remain intact, with a 5.4% spending increase, an allocation of R9.5 billion for teaching posts as well as an increase of R 20.8 billion over three years to employ 800 community service doctors.

The R11 billion to get civil servants over 55 to retire early has been reduced by R5,5 billion.

The R1 trillion infrastructure package also remains untouched from the February budget. Infrastructure is a key source of driving growth to the 3% target hoped for in the medium term.  

The minister devoted considerable time to efforts to fight corruption, which he said has the unanimous backing of his cabinet colleagues to shield whistleblowers. He reported on progress in recovering ill-gotten gains, with R8 billion recovered state capture cases alone.

The ANC welcomed the budget, saying it was a product of consultation, rather than court orders.

“These engagements laid the foundation for a fiscal framework that seeks to balance the competing needs of the state whilst advancing inclusive development,” it said.

“The allocation of 61 cents of every rand spent towards social spending is also a welcome development, reflecting a firm commitment to equity and social protection.”

The lead party in the GNU noted and praised much of what it has presumably agreed to.

But none of what the ANC says explains whose idea and what was the rationale for the 2% VAT increase, or what exactly was its intended end game? Especially given that it would hurt the party at the polls.

The EFF, victors of the parliamentary process of the budget, dismissed it as “weak, misguided and utterly disconnected from the lived reality of South Africans”.

“It is a budget that ignores the worsening unemployment crisis, fails to address poor economic growth and continues the failed orthodoxy that has plunged our country into austerity, despair, and underdevelopment.”

The EFF pointed out that Treasury has ignored all proposed alternatives from all political parties, including the eight the ANC negotiated with.

“The VAT increases have simply been substituted with austerity,” the party said.

It pointed out that the absence of both President Cyril Ramaphosa, who was in the United States, and Deputy President Paul Mashatile, who was in France, saying this “forms part of a broader campaign to depoliticise the budget and shield the National Treasury from democratic scrutiny and public accountability”.

The budget could not be postponed further because the National Council of Provinces will process it on 30 July, which is the end of the four-month period allowed by the Public Finance Management Act. If it had been postponed, departments would only have access to 10% of their budget, which would not cover the wage bill.

The EFF called the budget the “technocratic betrayal of the people” and attacked the refusal to adjust tax brackets for inflation.

Cosatu welcomed the budget and described the scrapping of VAT as “a positive moment in our democratic evolution”.

However, it regretted the decision not to extend VAT exemptions for additional food items or provide further fuel price relief.

“We urge government to pursue additional measures to cushion indigent households from poverty, in particular expanding free electricity and water.”

The DA said it cautiously welcomed the budget and claimed credit for VAT victory through its court action.

“Overall, we see this Budget Speech as a turning of the tide toward growth and investment. It is turning away from unchecked government spending funded by South African taxpayers.”

It was pleased that there were new bailouts for state-owned enterprises.

Professor Raymond Parsons of the North-West University described the budget as “pragmatic under the circumstances”.

That is the best Godongwana could be. 

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The SA Federation of Trade Unions has called for workers to unite and fight anti-labour laws, austerity measures and proposed Draft Code Amendments, which it argues will lead to workers being dismissed at the whim of employers.

As the country celebrated Workers’ Day, Saftu general secretary Zwelinzima Vavi pleaded with the working class to rise up and defend their rights, saying employees were under siege.

Vavi said workers were facing brutal austerity measures, which were ripping apart communities while corporate profiteering was driving hunger and homelessness.

“The bosses and their government are not stopping at VAT. They are unleashing a direct assault on worker rights through vicious Labour Law Amendments and a Draft Code of Good Practice on Dismissal. These are not ‘technical changes’, they are rather a blatant declaration of war on the working classs,” he warned on Thursday.

Vavi warned if these proposals were implemented, workers would be dismissed without hearings from small employers.

“Comrades, these proposals must be crushed,” he said.

Vavi acknowledged workers who protested against the value-added tax hike in Cape Town, saying their courage, sacrifice and defiance have lit a beacon of hope.

While acknowledging the Economic Freedom Fighters bid that successfully challenged the hike, Vavi denounced the Democratic Alliance, saying while the party “pretended” to oppose the tax increase, behind closed doors it was plotting to oppose progressive gains.

These included the progressive National Health Insurance, which he said the party was sabotaging to keep healthcare a luxury for the few, and the Basic Education Law Amendment Act to deny black children quality education.

And it was opposed to the Expropriation Act to maintain the status quo on land, the general secretary said.

“The DA’s game was not to defend the poor — but to protect the interests of big business, defend apartheid-era privileges and cement neoliberal capitalism. We call on workers to reject these false friends of the poor and build our own power.”

Vavi said the country was on the precipice with a broken system for a few and 63% of workers trapped below the poverty line, 23.7% starving below the food poverty line, 41.9% falling in the expanded unemployment category.

“Youth unemployment stands at 59% and black women face the highest rate of all — over 40%. In rural areas, services are collapsing and job opportunities have vanished entirely.

“Unemployment continues to reproduce the same apartheid patterns of racial, gendered and spatial inequality — hitting the poor, black, working-class majority the hardest,” he said.

Further, public services were collapsing and communities dying of hunger, crime, and diseases while corruption ran like blood through both private boardrooms and public offices.

“South Africa is not a democracy for the working class — it is an open-air prison of austerity and stolen dreams. We must tear it down and rebuild a society for the many, not the few,” Vavi said.

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Finance Minister Enoch Godongwana conceded that he and the ANC have learnt lessons from the Budget and VAT hike fiasco.

The minister has proposed 21 May as the date of tabling the third instalment of the national Budget.

“We have learnt lessons,” Godongwana said at a media briefing he hosted with his equally embattled director-general Duncan Pieterse. “One of them is that we are in a coalition government. We have do something differently.”

Godongwana doubled down on his stance that he would not resign unless relieved of his duties by President Cyril Ramaphosa. He does not expect a motion of no confidence against him to succeed as ministers are not elected by Parliament, unlike the president, who could face such a motion, and he would fall with him if he did.

Explaining the budget reset process, Godongwana noted: “This comprehensive review will include the Fiscal Framework, the Appropriation Bill, Division of Revenue Bill, and already tabled Rates and Monetary Amounts and Amendment of Revenue Laws Bill.”

The latter contains the decision to reverse the VAT hike that was to kick in on Thursday and is currently on hold due to a court order.

He noted that there would be extensive consultation.

“This includes formal consultations with the Financial and Fiscal Commission, thorough consultations with all political parties within the Government of National Unity as well as Cabinet approval before presentation to Parliament.”

This leaves unclear the position of parties like ActionSA, who are outside of the GNU but had supported him in the adoption of the Fiscal Framework and Revenue Proposals, which has since been nullified.

Godongwana laid the ground for the upcoming negotiations by pointing out that measures that were designed to cushion the VAT increase, such as increased grants and a wider VAT exemption net, would need to be reviewed.

He refused to be drawn on whether he had identified any areas of savings.

Godongwana pointed out that the idea of tapping it into funds like the Temporary Employee Relief Scheme (TERS), which was put in place during the Covid-19 pandemic, would not work as TERS fell under the Unemployment Insurance Fund, which was governed by separate legislation.

Pieterse noted that Section 10 of the Money Bills Act gave the government up to four months after the start of the financial year to put a budget in place and Parliament adopt it.

As the financial year starts at the beginning of April, this gives the government until the end of July.

The Public Finance Management Act through Section 29 makes provisions for spending to continue at 45% of the preceding year’s levels for the first four months and 10% thereafter if a new budget is not in place.

Provinces and municipalities receive 45% of their allocation.

Asked whether this episode has dented government credibility in the eyes of rating agencies and investors, Godongwana said both groups were used to budget impasses caused by coalition disagreements.

He noted that for them a credible budget was one that was sustainable.

Pieterse said they had spoken to rating agencies on the sidelines of the recent International Monetary Fund and World Bank Springs Meetings, and what they were concerned about was if fiscal goals could be met.

Godongwana subtly defended his original 2% VAT hike proposal arguing that he was trying to plug a R112 billion revenue gap that was to go above baseline spending over the Medium-Term Expenditure Framework.

He said baseline allocation over the MTEF was here to stay, which meant the most likely change was a cut in spending. 

“While the postponement of the budget’s passage is not ideal, the circumstances leading to this decision have highlighted the importance of meaningful engagement on fiscal matters,” the minister said, noting that a new full consulting cycle would need to be put in place.

Consultations for the Mid-Term Budget Policy Statement are set to start in September, although that only leaves a month to its tabling in October.

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Parliament has begun the process of cleaning the VAT and budget cancellation by confirming the suspension of the VAT hike that was due to kick in on Thursday.

The committee meeting that was to process the Money and Rates Bill that was to precede the VAT hike has also been cancelled.

 The suspension of the hike is because of an order handed down by the Western Cape High Court on Sunday.

The court order also set aside the 2025 Fiscal Framework and Revenue Proposals that were adopted by Parliament at the beginning of April before being successfully challenged by the Democratic Alliance and the Economic Freedom Fighters (EFF).

“The court order thus ensured legal certainty and prevented the previously announced VAT increase from automatically taking effect on 1 May,” Parliament said in a statement

But Parliament does not admit to any procedural misstep in reaching the settlement that led to the court order.

 “Parliament did not admit to any procedural defect,” the legislature said in its statement.

The EFF has welcomed the cancellation of the meeting of the Standing Committee on Finance, reiterating its long-held stance that the withdrawal of the 2025 Appropriation Bill and Division of Revenue Bill renders the processing of the Money Bill illegitimate.

“We reiterate that Parliament must be a custodian of the law and not an instrument of political expediency.” the EFF said.

“The cancellation of the meeting is a necessary and welcome step toward restoring constitutional compliance and upholding the rule of law within Parliament.”

The party has now called for vigilance from all MPs, irrespective of party affiliation, in monitoring every step of resetting the budget process.

“No shortcuts, no irregularities and no abuse of parliamentary procedure can be tolerated.”

Finance Minister Enoch Godongwana and National Treasury director-general Duncan Pieterse, both of whom the EFF have called to resign, will now give the new steps and timeline to be followed in tabling the new budget.

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The Economic Freedom Fighters have emerged as the real heroes of the budget crisis that has engulfed the country since the cancelled budget speech in February, correctly calling out the matter on principle and procedure and ultimately getting the reset of the process it has been calling for since the beginning of April.

Their victory was confirmed on Sunday when the Western Cape High Court set aside the Fiscal Framework and Revenue Proposals that were adopted by Parliament’s finance and appropriations committees on 1 April and the two houses of Parliament the next day.  

The court ruling also nullified the lingering threat of a 0,5% VAT increase that was to kick in on Thursday.

“This decisive court order vindicates the principled stance the EFF has consistently taken to defend the Constitution, the rule of law, and the interests of the poor and working class against political expediency and executive overreach.” EFF president Julius Malema said at a press conference on Monday.

To be clear the Democratic Alliance put up an equally brave fight. Their opposition made an admirable touching spectacle of a party that is viewed as white and upper middle class championing a cause of the poor and working class.

But their fight was somewhat undermined by the fact that at the height of bargaining, they were willing to support the VAT increase in exchange for compromises on the Basic Education Laws Amendment Act and Expropriation Act, which were battles they had already lost.

Also, their court action was narrow and technical, focused mostly on the VAT increase and ministerial powers to unilaterally announce it. As Malema pointed out, most of the outcomes granted by the court were on the EFF wishlist, or prayers as they are called in legal parlance.

As it turns out, the EFF pointed out in writing to the Speaker the procedural flaw of the 1 April meeting. They reiterated this on the floor ahead of adoption on 2 April before making good on their threat to go to court.

The parties that supported the ANC did so on condition that alternatives to the VAT hike would be sought within 30 days and Speaker Thoko Didiza tried to save the situation by retrospectively pointing out on 21 April, that the framework and proposals were adopted “with conditions”.

But Malema has since made the point that there was no provision for conditional approval in the law.

A new framework and proposals, effectively a new budget, will have to be tabled to replace what Malema calls “a shallow political compromise aimed at appeasing financial markets”.

He points out that this victory also does not have anything to do with the ANC’s reduced majority in Parliament.

Malema said that when the ANC had the majority, the EFF (together with the United Democratic Movement) took Parliament to court over former president Jacon Zuma’s residence in Nkandla, and the legislature was reined in a landmark ruling.

The issue is that South Africa has a constitutional, not parliamentary, supremacy.

The EFF has since written to both Didiza and Dr Joe Maswangayi, chairperson of the Standing Committee on Finance, to halt the proceedings scheduled for Wednesday to process the Money Bill that seeks to reverse the VAT hike.

But proceeding with the committee sitting would be a face saving and moot exercise on the part of the ANC, designed to appear in control of a process they have lost control of. The reality is, as the DA and EFF pointed out in their court papers, the VAT increase reversal needed to be an order of the court, partly because they do not trust Finance Minister Enoch Godongwana or the ANC.

The parties that supported the ANC, who include the IFP, ActionSA, the PAC, Rise Mzansi, Bosa, GOOD Party and the PA among others, did so purely on good faith and a handshake.

As the finance minister announces the changes in VAT through the VAT Act of 1991, a Money Bill may have proven insufficient to halt it.

Godongwana could have broken the promise and implemented the increase on a whim or a technicality, shrugged his shoulders and then called in President Cyril Ramaphosa to charm the parties with an apology and “look for a solution” while the country adjusted to higher VAT.

Now of course Parliament, and South Africa, will have to live with an emboldened EFF, ready to dish out lectures on parliamentary procedures and the Constitution.

“The GNU has failed the people of South Africa.” Malema declared.

Drawing on the significance of the 27^th of April as the date on which the judgment was delivered, Malema called this a “turning point” in how the ANC would have to negotiate any piece of legislation it needed to pass. The ANC now knows it can draw on partners outside of the GNU should it need to, which raises the question of what the point is of having some people inside the GNU tent.

The EFF has now called itself “the official opposition” and as the fourth largest party with 10% of the vote, that might be a stretch.

“There are people who call themselves opposition in numbers, but not in substance,” Malema said.

He then noted that the EFF would not support a vote of no confidence in Godongwana, whom they have called on to resign alongside Treasury director-general Duncan Pieterse.

The EFF’s argument is that it’s the president who appoints ministers and not Parliament.

However, it will support a motion of no confidence against Ramaphosa.

As things stand, the country will operate with last year’s budget until the new one is tabled. So, grants will be paid, but without the proposed increases.  

Malema could not resist taking a swipe at his former lieutenant Floyd Shivambu, who shook the EFF with his departure to the MKP. Describing him as being perceived as the “think tank” of the EFF, Malema questioned evidence of his “think tank” capabilities from his current role as secretary general of the MKP.

One phrase that we are going to have to get used to is that, as a country, we must “submit to superior logic” admittedly demonstrated throughout this debacle.

The phrase was also famously used by Shivambu to the late finance minister Tito Mboweni when the latter unveiled the post-Covid economic policy

Malema started his briefing by acknowledged the passing of Pope Francis, praising his selflessness and fight for the poor.

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Finance Minister’s Enoch Godongwana’s decision to suspend value-added tax in a lawful matter shows that government decisions cannot be made without proper oversight, according to the Democratic Alliance.

“It also gives South Africans certainty that changes affecting their pockets will not happen without the necessary checks and balances in place,” said DA Federal Council chairperson Helen Zille.

“The impending VAT hike has now been formally stopped by an order of court agreed between the Minister of Finance and the DA. This also includes a settlement with the Speaker.”

The Western Cape High Court ruled on Sunday that the hike must officially be suspended.

She said the decision ensured that any changes to the VAT rate must be properly approved by Parliament before taking effect, and it set aside the unlawful support lent to this VAT hike by a number of parties.

Meanwhile, the African National Congress has said it noted the court’s decision to issue an order setting aside Parliament’s adoption of the Fiscal Framework tabled by Godongwana last month.

Godongwana announced his decision to reverse the VAT hike and introduce the Rates and Monetary Accounts and the Amendment of the Revenue Laws Bill (Rates Bill) on the 24 April.

The Fiscal Framework and Revenue Proposal, which is part of the three budget instruments, is the foundational document for the National Budget and sets out a blueprint for how government will raise and spend money for the period under consideration.

As part of the adoption of the budget, legislation dictates that once the Fiscal Framework has been adopted Parliament must thereafter pass sequentially and within the stipulated timelines, the Division of Revenue Bill and the Appropriations Bill.

“Today’s court order therefore has the effect of setting aside the adoption of the Fiscal Framework, as adopted by the two Houses of Parliament, as a result of the minister’s decision to reverse the increase in VAT thereby amending the Fiscal Framework,” the party said.

The order enables Godongwana to table the budget instruments afresh.

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Finance Minister Enoch Godongwana has formally set in motion the process to revere the proposed 0,5% VAT hike, but the process faces both legal and technical challenges, starting with the fact that the minister has also withdrawn the bills that underpin the entire process.

Parliament has confirmed that the minister has tabled the Rates and Monetary Amounts and Amendment of Revenue Laws Bill, or Rates Bill, which reverses the VAT hike by leaving the rate unchanged at 15% from 1 May.

Communication from National Assembly Speaker Thoko Didiza’s office confirms that Bill has already been referred to the Standing Committee on Finance for processing. But at the same time, Godongwana has withdrawn the 2025 Appropriation Bill and Division of Revenue Bill, which are critical pillars of the budget.

The EFF has sought to challenge this anomaly.

In a letter to the Speaker’s office, the Red Berets point out that the 2 April vote that approved the Fiscal Framework and Revenue proposals is the subject of a legal challenge by the EFF, with judgment expected next week Tuesday.  

The EFF then generously argues that even if the 2 April vote is allowed to stand, the withdrawal of the Division of Revenue Bill by the minister undermines the entire process.

“This alone places the processing of the Rates Bill on constitutionally shaky ground, with serious risks for the legal validity of any amendments to tax rates or related revenue matters.” the party said in its letter.

The judgment will also pronounce on a challenge brought by the DA, which challenges a section of the VAT Act that gives the minister unilateral powers to announce a change in the VAT rate. That judgment will proceed unless an out of court settlement is reached with the DA.

“It is the EFF’s considered view that Parliament should not process a Bill so central to the 2025 Budget while the legality of the fiscal framework remains under judicial scrutiny,” the EFF notes, adding that to do so “would risk further undermining the credibility and integrity of the legislative process”.   

The country’s fourth largest party then proposes that “a brief pause to await the court ruling scheduled for the 29th of April 2025 would not delay Parliament unreasonably but rather demonstrate institutional respect for legal processes and enhance constitutional governance”.

The EFF points out that the R75 billion revenue shortfall over the next three years now confirmed by Treasury alters the Division of Revenue and violates the legislative requirement that revenue must be consistent with planned spending.

It has called for a meeting of all party leaders to resolve the crisis.

The party has also called for a workshop of the Standing (National Assembly) and Select (National Council of Provinces) Committees on Finance and Appropriations to clarify timelines of approving the various instruments.

A scenario that has been presented is that since the SA Revenue Service and company systems had been geared to process the new rate, the increase will be allowed to kick in while Parliament processes the reversal, a move that now involves tabling a revised budget, and then later in the tax year process rebates and refunds on VAT claims for the months that the higher VAT would have been in place.

The speaker’s office could not be reached for comment, and Parliament is due to go on recess next week.

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