With the National Budget Speech Rescheduled for March 12, the ANC’s Threat to Partner with the EFF Over a VAT Hike Sparks Fierce Debate Within the Government of National Unity and Raises Stakes for Economic Stability
Cape Town, South Africa – March 3, 2025, 5:32 PM CAT South Africa’s political landscape teetered on the edge of upheaval today as the African National Congress (ANC) signaled it might turn to the Economic Freedom Fighters (EFF) to push through its contentious 2025 budget, set for a pivotal vote on March 12. The move, floated over the weekend, comes after coalition partners in the Government of National Unity (GNU)—notably the Democratic Alliance (DA)—rebuffed Finance Minister Enoch Godongwana’s initial plan to hike value-added tax (VAT) from 15% to 17%, forcing an unprecedented postponement of last month’s budget speech. Now, with a revised 0.75% VAT increase on the table, the ANC EFF budget alliance looms as a potential game-changer, threatening to fracture the fragile 10-party coalition forged after the ANC lost its parliamentary majority in 2024.
The standoff erupted in February when Godongwana’s VAT proposal—aimed at plugging a R300 billion budget deficit—met fierce resistance from the DA and others in the GNU, who argued it would crush consumers already reeling from a cost-of-living crisis. The delay, a first in post-apartheid history, sent the rand tumbling and rattled markets, amplifying pressure as U.S. President Donald Trump’s recent aid cuts bite deeper. On Sunday, ANC insiders, including Second Deputy Secretary-General Maropene Ramokgopa, hinted at courting the EFF’s votes if the DA holds firm against the scaled-back hike, a gambit that’s inflamed tensions within the coalition.
“We’re not here to be bullied,” fired back DA finance spokesperson Dr. Mark Burke, accusing the ANC of “reckless governance” that risks economic collapse. The DA, touting spending cuts and SARS modernization as alternatives, hailed February’s derailment as a win for taxpayers, but the ANC’s pivot to the EFF—a party it’s long sparred with—suggests a willingness to gamble stability for fiscal control. EFF leader Julius Malema, while historically anti-VAT hikes, has stayed coy, with party sources hinting they’d back the budget if it spares the poor and hits corporations harder—a stance the pro-business DA staunchly opposes.
The stakes couldn’t be higher. National Treasury warns of a ballooning debt load—projected to hit 75.3% of GDP by 2026—exacerbated by social grants, public sector wages, and SANDF deployments in the DRC. The ANC’s trimmed VAT proposal, adding roughly R15 billion annually, aims to balance these demands, but critics like SAFTU’s Zwelinzima Vavi call it “a direct assault on the working class,” pushing instead for wealth taxes and tighter capital controls. On X, sentiment splits hard: some laud the DA’s stand—“No VAT hike, protect the people!”—while others see the ANC’s EFF flirtation as pragmatic—“Get it done, whatever it takes.”
With nine days until Godongwana faces Parliament, the GNU’s unity hangs by a thread. President Cyril Ramaphosa, backing a 0.5% to 1% VAT range at a February 24 cabinet meeting, has tapped Deputy President Paul Mashatile to broker options, with a report due today. Yet, as the ANC digs in and the EFF looms, analysts like Wits University’s Dr. Jabulani Mnisi warn of a “political earthquake” if the coalition splinters. “This isn’t just about tax—it’s about who steers South Africa’s future,” he said.
For ordinary South Africans—like Durban shopkeeper Nomsa Khumalo, eyeing rising prices with dread—the wrangling feels distant yet visceral. “They argue up there, but we pay down here,” she sighed. As March 12 nears, the nation watches, wallets in hand, for a budget that could either steady the ship or sink it deeper.
