It took late-night meetings and last-minute scheming in the corridors of parliament for the ANC to push through the highly contested 0.5 percentage point VAT increase in the annual budget.
ANC chief whip Mdumiseni Ntuli played a central role and this week took the Sunday Times through the difficult negotiations after the DA, its biggest government of national unity (GNU) partner, made it clear that the ANC should not rely on it to pass the budget.
Ntuli detailed how the ANC finessed its way through a hardened parliament which was unflinching in its position to reject the budget, which included a 0.5 percentage point increase of VAT.
Last week it seemed all hope was lost for the ANC as one party after another closed the door on its attempts to lure them towards supporting finance minister Enoch Godongwana’s unpopular VAT increase proposal. The rejection by the biggest parties — the DA, EFF and MK Party — were a near-fatal blow to the ANC, as it was failing to find common ground with ActionSA, one of the smaller parties with the potential to tilt the scales in its favour.
Before this, the task team convened by Ntuli had made some headway with opposition parties. He detailed how initial meetings with the EFF “gave us a signal that they might be able to compromise on condition that we don’t work with the DA”.
ActionSA had put forward several demands in its initial meetings, which included:
- the scrapping of deputy ministers by 2029,
- a one-year limit to the 0.5 percentage point VAT increase,
- co-operation on the budget to cut wastage,
- strengthening the Special Investigating Unit and the National Prosecuting Authority,
- exhuming the three bodies of the 2016 Lily Mine disaster in Barberton, as well as
- support for better revenue service (Sars) collection.
But despite an agreement, an unsuspecting Ntuli learnt that ActionSA had communicated that its party leaders were unwilling to negotiate over the budget. Ntuli would then meet Build One South Africa leader Mmusi Maimane, who argued for the Treasury to evaluate spending towards the National Empowerment Fund to fill the revenue shortfall.
When we met with the DA on Monday, it came in with a very junior delegation. In the course of our discussion, they said they don’t have a mandate to negotiate
— Mdumiseni Ntuli, ANC chief whip
Days after closing the door on negotiations, ActionSA did a 180° turn, reopening lines of communication just days before the budget vote.
“The discussion was now about VAT. They asked for a focus, and they said we are willing to support you on condition that we remove the VAT. So we had to work in what way we can [to] remove the VAT. So ultimately the compromise was that [the] fiscal framework must be passed because we said to them we are willing to discuss the removal of VAT, but we are not willing to postpone the committee meeting and budget approval because that will be a victory for the DA, which has publicly declared there is no budget without them and there is no GNU without them.”
Ntuli said the ANC then drafted a document which stated that the fiscal framework be adopted on condition that work is done before May 1 to find alternative revenue to finance the VAT increase.
“We agreed on the formulation in the portfolio committee, when the portfolio committee was in session, that is when the formulation was finalised, because they did not want the report to say the committee recommends — they wanted the report to say the committee adopts the framework on condition.
“We had a fight with them, but at least we were fighting with people who agreed with us. It was a matter of how do we word our report. So [Athol] Trollip [of ActionSA] and myself had to negotiate and inform our members in the committee. In fact, at some point we had to take a break because the parliamentary legal adviser was not happy with the formulation.”
In the background, Ntuli was also making attempts to convince the Freedom Front Plus (FF+) to support the budget. In communications the party said it did not want to risk taking a vote in favour of a process with a VAT increase and the offensive that would follow.
“When we met with the DA on Monday, it came in with a very junior delegation. In the course of our discussion, they said they don’t have a mandate to negotiate.”
At the doors of parliament, the EFF would again communicate its desire for the DA to leave the GNU as a condition for its support. During the parliamentary debate, Ntuli was still working to convince parties to join them in passing the budget.
“The FF+ said they understood the worry over loyalty and remaining in the GNU but at least we will still have a constituency to contest the next elections. I said to them what if you abstain and they wanted to consult. When they came back, they said that it would be risky because the DA and other opposition would say they stood on the fence when a decision was between protecting your base or advancing what they call ANC corruption on the VAT hike.”
He said talks continued while parliament was in session as he approached the ACDP and National Coloured Congress (NCC).
“I lobbied the NCC during the ten-minute break and asked them why would you vote with the DA? We conspired with them and they agreed that they can never vote for a DA position, rather they must abstain. It was now minus two votes on that side. This was to compensate for two of my members who were not available.”
Ntuli said he was confident that the Treasury would honour the agreement with ActionSA, as during negotiations Godongwana was kept abreast of the terms of the agreement.
“National Treasury knows the effort we had to put in place to get the fiscal framework passed. The minister started by proposing a two percentage point VAT [increase] and when it was not carried through the person who was most embarrassed was the minister. It was the first time a minister made a budget proposal, and it is rejected by his colleagues in the cabinet,” he said.
“When it was reworked, he would have had difficulty to remain as the minister of finance because you can’t have a finance minister who does not have the pulse of the nation in his hands. So I don’t believe he will undermine this effort. If anything, this effort has saved the National Treasury,” he said.
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