Finance Minister Enoch Godongwana cornered and outnumbered

Finance Minister Enoch Godongwana faces an uphill battle to find enough political support to pass his 2025 Budget in parliament.

The minister delivered the 2025 National Budget Speech on Wednesday, 12 March. The speech featured painful tax measures for South Africans, including a 0.5 percentage point VAT increase for 2025.

While this is lower than the 2.0 percentage point hike initially proposed in February, it will be followed by another 0.5 ppt hike in 2026, bringing VAT to 16%.

The VAT hike and other tax proposals have faced significant opposition from political parties inside and outside the ANC-led Government of National Unity (GNU), with multiple threats to vote it down.

Godongwana’s biggest concern is the Democratic Alliance (DA), the country’s second-biggest party. The DA is crucial to the GNU passing the budget in May.

The DA has explicitly rejected the budget and will not vote in support of it. The party has taken a firm anti-tax hike stance and said it wouldn’t vote for a budget that puts more pressure on taxpayers.

“We will not relent on the urgent need for growth and a job budget. This budget, therefore, does not have a majority support as it’s tabled in parliament,” said DA leader John Steenhuisen.

The finance minister has argued that the budget’s tax measures are necessary to fund the government’s critical spending plans while avoiding overtaxing major revenue contributors.

However, opponents have hit back, saying the government needs to cut its exorbitant and wasteful spending, reduce losses to corruption, and focus on economic growth instead.

While the DA is confident that the budget will not pass without its vote, it is not impossible. Ultimately, it will all come down to a very important numbers game within the National Assembly.

The ANC needs a simple majority (50%+1) to pass the budget—201 votes.

The GNU has 287 of the 400 seats in the National Assembly—more than enough to pass the budget if there were consensus.

However, GNU partners the DA and the Freedom Front Plus are against tax hikes in the budget and will remove 93 votes if their demands aren’t met.

The IFP has also taken an anti-VAT hike stance, though its voting intention remains unclear. Ahead of the budget, the IFP said it does not support any VAT hike.

Godongwana has stated that if the parties within GNU do not support the budget, he will court parties outside the coalition for votes—but he may also fall short here.

The next biggest parties outside the GNU—the MK Party and EFF —have given a hard no to VAT hikes.

The MK Party has threatened to take to the streets over the VAT hikes, and the EFF has also rejected the budget based on the VAT increase.

Combined, the DA, EFF, MK Party, IFP and FF+ have 207 seats in the National Assembly, enough to stop the budget proposals in their tracks.

While it is still to be determined how each will ultimately vote, this clearly indicates how outnumbered the ANC is if it can’t find a way to compromise.

The budget vote will fail unless the party can woo over the rest of the opposition and get one of the heavyweights to flip their position.

Uncharted waters

Unfortunately for South Africa, this will leave markets with months of anxiety and uncertainty as the proposals undergo parliamentary processes.

According to Nedbank Chairman Daniel Mminele, the lack of consensus on South Africa’s Budget has thrown the process into disarray. He urged lawmakers to patch up differences to ensure policy certainty.

Mminele added that disputes over VAT have thrown the country into a whole new unprecedented set of circumstances.

“Typically, once the minister tables the budget, there’s almost a falling of dominoes in terms of what needs to happen. We’ve now been thrown into a little bit of disarray in that regard.”

The matter will come to a head in May when lawmakers decide whether to pass the revenue and expenditure plan after debating allocations to government departments and entities.

Mminele said that South Africa should take comfort in the fact that the minister tabled the budget documents, which allows the process to continue and negotiations to progress.

“But we can’t be complacent about having a budget. We don’t have a budget,” he said.

Lobby group Business Leadership South Africa (BLSA) described the lack of consensus on the budget as “disturbing.”

“The fiasco of last month’s delayed budget and today’s tabled budget, which may be rejected in parliament, is likely to be repeated unless the government faces some harsh realities,” the group said.

“Things cannot simply continue to be done in the same ways because that will lead to the same outcomes.”