Finance Minister’s head on the block

Efficient Group chief economist Dawie Roodt said Finance Minister Enoch Godongwana’s head is on the block following the VAT debacle.

On Thursday, 24 April 2025, National Treasury announced that Godongwana will soon implement measures to reverse the planned 0.5 percentage point VAT increase.

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

Godongwana initially wanted to implement a 2 percentage point VAT increase. However, the government of national unity (GNU) rejected this proposal.

It forced the finance minister to postpone his planned 2025 Budget Speech, which was set to take place on 19 February 2025, to 12 March 2025.

The National Treasury returned to the drawing board to find alternative ways to raise the additional income the government needed to support and grow the economy.

It also provided additional time for the national unity government to discuss the budget and find the best way forward.

On 12 March 2025, Godongwana delivered his 2025 Budget speech, announcing a 0.5 percentage point VAT increase.

It caused a rift in the GNU, culminating in the Democratic Alliance launching a court challenge to stop a proposed value-added tax increase.

“The DA is taking legal action to prevent what it believes to be an unjustified burden on already struggling South African households,” it said in a statement before the hearing.

“The party contends that the increase will further escalate the cost of living, disproportionately affecting the poor and vulnerable.”

Other stakeholders, including Roodt and retired judge and tax expert Dennis Davis, also said the VAT increase was unnecessary.

Davis said that with a budget of around R2 trillion, the National Treasury should easily find R13.5 billion in savings, rendering the VAT increase unnecessary.

Roodt said the South African Revenue Service (SARS) collected around R10 billion more than expected in the previous financial year.

“Half a percentage point increase will raise around R10 billion. That means the state has the money. We don’t need to increase VAT,” Roodt said.

“There was an overrun in the previous financial year, which is enough to prevent the planned VAT increase.”

Finance Minister Enoch Godongwana’s head on a block

The VAT debacle caused a lot of damage to the ANC. Its voter base did not want a VAT increase, and the latest developments made it look weak and incompetent.

Roodt said Godongwana’s amateurish handling of the 2025 Budget and planned VAT increase puts his position at risk.

“He is not the best finance minister. However, he is the best the ANC can offer at this stage,” Roodt said in an interview with Biznews.

“The VAT debacle was a blunder that cost the ANC big time. There will be pressure to replace him with a new finance minister.”

Roodt said Mcebisi Jonas, the former deputy finance minister, would be a brilliant choice to lead the country’s financial portfolio.

In June 2018, Mcebisi joined MTN as an independent non-executive director and was promoted to chairperson in December 2019. He also served on the Sygnia and Northam Platinum boards.

He further heads Ntiso Investment Holdings, a leading partner in the consortium that became Apex Group’s black economic empowerment partner in October 2023.

President Cyril Ramaphosa recently appointed Jonas as his special envoy to the United States to mend the relationship between the two nations.

This shows that Ramaphosa has trust in Jonas and that he values his negotiation and business acumen.

Roodt does not see Jonas as a long-term diplomat in the United States, saying the President’s decision to put him in that position was a blunder.

Should Ramaphosa replace Godongwana as finance minister, it would not be a complete surprise.

In March, Africa Intelligence reported that Godongwana has told colleagues he will resign if the coalition government continues to reject the VAT hike.