Budget Speech clash: The elephant in the room

Source: SABC.

The primary point of contention are the details of a proposed 2% increase in Value Added Tax (VAT), which has led to an impasse among Cabinet ministers. President Cyril Ramaphosa convened an emergency meeting to address the issue, but consensus could not be reached.

The Inkatha Freedom Party (IFP) and DA were among the parties that backed the postponement, seeing it as a demonstration of leadership, while the United Democratic Movement (UDM) said it was not consulted about the tabled proposal.

Meanwhile, the Economic Freedom Fighters (EFF) and the MK Party urged that the Budget Speech go ahead. They condemned the delay as driven by petty party politics.

"The postponement is in the best interests of all South Africans," said John Steenhuizen, leader of the Democratic Alliance (DA).

Overlooked proposal

Steenhuisen has expressed strong opposition to the 2% VAT increase, warning that such a tax hike would disproportionately affect millions of South Africans already suffering under a cost of living crisis.

He did not mention one very important point though: South Africa's VAT-hike proposal isn't new. In September 2023, Treasury officials suggested a 1% to 2% increase to raise R24.5bn to R49.4bn annually for the Social Relief Distress (SRD) grant.

To this end, The South African government has been actively exploring the implementation of a Universal Basic Income (UBI) to address widespread poverty and unemployment. In 2023, the Social Policy Initiative (SPI) proposed a phased introduction of UBI over three years, starting with a monthly amount of R798, increasing to R1,804 by the third year. To finance this initiative, the government considered a Value Added Tax (VAT) increase.

It's been a long time coming. And, If "millions of South Africans are already suffering under a cost of living crisis", with the inference here being the Middle Class, where does that leave the burden on low-income households? You'd think a UBI would assist the poor, right? And yet, Steenhuisen made no mention of that today.

Missing UBI debate

"The postponement of the Minister of Finance’s 2025/26 National Budget Speech today is a victory for the people of South Africa, as it prevents the implementation of a 2% VAT increase that would have broken the back of our economy," Steenhuisen said.

I get that. But that’s only part of the picture—there’s far more at stake than we’re being told.

I'm not going to debate the pros and cons of a Universal Basic Income (UBI) for South Africa. But why was UBI completely absent from today’s parliamentary discussions?

When Julius Malema, Commander-in-Chief of the Economic Freedom Fighters (EFF), remarked on 'speaking up for the voiceless'—criticising the lack of microphones for party members—why didn’t he use that moment to address the state of UBI and the role a proposed VAT hike could play in funding it?

The Finance Minister’s no-show today is disheartening, underscoring a worrying lack of transparency from the Government of National Unity. And with all due respect to Steenhuisen, this is hardly 'a victory for the people of South Africa'—at least, not for all South Africans.

National Assembly Speaker Thoko Didiza announced the postponement of the 2025 Budget Speech until Wednesday, 12 March 2025.