How High-Stakes Call Led To Historic Budget Postponement

A high-stakes conference call between President Cyril Ramaphosa and coalition party leaders on Wednesday morning laid bare the deep divisions within the ruling government over Finance Minister Enoch Godongwana’s proposed budget.

With no agreement on tax hikes, the budget speech—scheduled for later that afternoon—was abruptly postponed for the first time in South African history.

VAT Hike Sparks Heated Debate

During the 7:30 am call, Godongwana presented two alternatives: raising income tax for high earners and increasing corporate tax or implementing a 2% VAT hike to generate nearly R60 billion. The latter was seen as the most effective way to fund key services such as healthcare, education, and public transport.

Democratic Alliance (DA) leader John Steenhuisen outright rejected any tax increases, warning that his party would not support such measures in Parliament. Other coalition members, including some ANC ministers, also expressed opposition to the VAT increase, making it impossible to reach a consensus before the budget deadline.

Budget Leak Fuels Speculation

Hours before the scheduled speech, Business Day published key details of the budget, suggesting an internal leak. Treasury sources pointed fingers at DA ministers, who had reportedly been raising concerns about the VAT hike since it was first mentioned in a February 5 cabinet meeting.

Finance Director-General Duncan Pieterse confirmed that the leaked information was accurate, while DA spokesperson Willie Aucamp denied the party’s involvement.

Historic Postponement and Market Fallout

With coalition leaders unable to agree, Godongwana was left with no choice but to delay the budget by three weeks, causing the rand to tumble against the US dollar.

He later confirmed that the revised budget would be tabled on March 12, allowing for further discussions on tax proposals and funding priorities.

DA Claims Victory Over VAT Hike

Steenhuisen wasted no time in claiming credit for the budget’s postponement, calling it a “victory” for South Africans and proof that no single party could force through unpopular policies.

“This is the new politics, the new normal of the government of national unity,” he said, insisting that South Africa needed job creation, not tax hikes.

His stance was echoed by Good party secretary-general Brett Herron, who criticized Treasury for failing to consult coalition partners properly.

Ramaphosa Downplays Crisis

In an effort to restore confidence, Ramaphosa assured South Africans that ongoing cabinet discussions would result in a budget that balances economic growth with social protection.

“We are working as partners to ensure that the budget is one that works for individuals and investors alike,” he stated.

The budget crisis underscores the fragile nature of South Africa’s coalition government, with further negotiations expected in the coming weeks to prevent another political deadlock.

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