By Kopano Gumbi
JOHANNESBURG (Reuters) – South Africa’s lawmakers will scrutinise the 2025 budget in the coming weeks, with amendments not ruled out as political parties weigh up a contentious plan to raise value-added tax.
WHAT HAS HAPPENED SO FAR?
Finance Minister Enoch Godongwana tabled a revised budget on March 12 that was rejected by most big parliamentary parties despite a reduction in the size of the proposed VAT hike from 2 percentage points to 1 point, spread over two years.
There is now no clear path for the budget to be passed before the current fiscal year ends on March 31, the first time that has happened in the post-apartheid era.
Godongwana’s African National Congress (ANC) needs the support of at least one other big party for the budget to pass.
WHAT’S NEXT AFTER THE BUDGET WAS TABLED?
Godongwana’s budget will be considered by lawmakers in three stages.
In the first stage, lawmakers vote on the fiscal framework and revenue proposals that lay out economic policy and revenue projections and set the overall limits for government spending.
Next they consider the division of revenue bill, which outlines how funds will be shared between the three spheres of government – national, provincial, and local government.
Last to be voted on is the appropriation bill, which allocates money to specific departments and programs.
Each bill must be passed before moving to the next stage.
According to parliament, lawmakers have until April 3, which is 16 working days after the budget was tabled, to approve the fiscal framework and related revenue proposals, but there is flexibility if delays occur.
Lawmakers have the power to amend the budget, within limits. According to parliamentary laws, any changes cannot exceed the revenue or spending estimates set out in the budget.
WHAT HAPPENS IF THE BUDGET IS NOT PASSED BY APRIL 1?
If the budget is not passed by April 1, the start of the new fiscal year, the law allows the government to continue spending up to 45% of the previous year’s budget until parliament approves the new budget.
The government cannot implement new budgetary allocations without parliamentary approval.
CAN THE VAT HIKE BE IMPLEMENTED BEFORE THE BUDGET IS PASSED?
The National Treasury said it can implement the VAT hike on May 1, even if the budget has not been passed in parliament.
“The alteration will be effective from a date determined by the Minister in that announcement, and continues to apply for a period of 12 months from that date,” said the National Treasury.
Should parliamentarians scrap the VAT increase after it has been implemented, subsequent adjustments to tax laws would need to be made within 12 months and the existing tax would not require repayment, a parliamentary spokesperson said.
WHAT IS THE ANC’S NEXT MOVE?
The budget has been the biggest test for the fractious coalition formed last year when the ANC lost its parliamentary majority for the first time in the democratic era.
ANC Secretary-General Fikile Mbalula said on Thursday that the party was prepared to talk to all political parties to find a way to pass the budget.
Godongwana has said he was open to hearing proposals from lawmakers on how to change the budget, but they needed to understand the difficult trade-offs involved.
(Reporting by Kopano Gumbi; Editing by Olivia Kumwenda-Mtambo and Hugh Lawson)
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