The Democratic Alliance has lost significant negotiating power within the Government of National Unity after pursuing legal action against the controversial 0.5% VAT increase, political analysts warned today. This development comes as the Treasury faces a looming deadline to find alternative revenue sources.
The ANC confirmed Tuesday it would maintain the coalition despite the DA’s court challenge. At a press briefing, ANC Secretary-General Fikile Mbalula stated the party would not expel the DA from the GNU over its opposition to the tax hike.
“By insisting on this VAT, the ANC risks political suicide,” said independent analyst Dr. Sandile Swana. “The DA has already tabled known alternatives to address the tax issue, and the ANC’s refusal to explore these options could have serious ramifications.”
The DA’s legal challenge argues Parliament’s finance committees followed improper procedures when adopting the fiscal framework. Additionally, the party seeks to declare section 7(4) of the Value Added Tax Act unconstitutional, claiming it grants the finance minister excessive authority.
The contested VAT increase is expected to generate R13.5 billion within South Africa’s overall R2.6 trillion budget. The measure passed through Parliament’s finance committee with support from the ANC majority alongside ActionSA, IFP, BOSA, and other smaller parties.
Swana questioned the sustainability of the coalition under current circumstances. “It’s a serious consideration for the ANC to assess how they work with the DA while it takes them to court over legislation that has been passed and signed into law,” he said.
Political analyst Professor Sipho Seepe highlighted additional tensions, suggesting any move to expel the DA could trigger retaliatory actions, including threats to investigate alleged financial misconduct related to President Cyril Ramaphosa’s Phala Phala scandal.
“The ANC is in the marriage for the sake of being in office. It is directionless and only follows the dictates of businesses invested in the Ramaphosa presidency,” Seepe stated.
The parliamentary vote on the VAT hike revealed clear divisions, with the ANC and allies supporting the increase while the DA joined the Economic Freedom Fighters, uMkhonto weSizwe party, and Freedom Front Plus in opposition.
Following an agreement with ActionSA to support the 2025 Budget, the ANC acknowledged Treasury’s challenges in finding alternatives to reverse the VAT increase within the stipulated 30-day timeframe. The agreement also includes inflation adjustments for personal income tax to prevent bracket creep.
As the deadline approaches, analysts suggest the political fallout could reshape South Africa’s governing coalition and economic policy direction.
