ActionSA leader Herman Mashaba said the party’s position has been vindicated following Finance Minister Enoch Godongwana’s decision to withdraw the proposed 0.5% VAT increase.

“Today, our position has been vindicated,” Mashaba said during a multi-party media briefing on Thursday.

“Despite this, what followed was a deliberate and well-funded misinformation campaign that misled you, the South African people, falsely claiming that ActionSA had supported a VAT increase.”

This comes after some political parties, including the Democratic Alliance, which opposed the VAT hike, argued that ActionSA had been misled into backing the 2025 National Budget, which initially included the controversial increase.

“While some continued to play politics, ActionSA made substantive submissions of revenue alternatives to the finance minister and began a series of engagements with the ANC,” Mashaba said.

The media briefing, led by the African National Congress, included Government of National Unity partners such as the Patriotic Alliance, Inkatha Freedom Party, United Democratic Movement, and Good Party, along with opposition parties like Build One South Africa and ActionSA.

The announcement follows weeks of tense negotiations among parties to resolve the budget impasse sparked by the VAT proposal.

Godongwana has formally withdrawn the VAT hike, which was set to take effect on May 1. The tax rate will remain at 15%.

In a statement issued Wednesday night, the National Treasury said the decision followed extensive consultations with political parties and a review of recommendations by parliamentary committees.

It also acknowledged that scrapping the hike would result in a projected R75 billion revenue shortfall over the medium term.

Godongwana has since written to National Assembly Speaker Thoko Didiza to inform her of the decision. Parliament is now tasked with adjusting expenditure to prevent any threats to fiscal sustainability.

“The decision not to increase VAT means that measures designed to cushion lower-income households against the impact of the rate hike will now be withdrawn,” the Treasury said.

“Other expenditure decisions will also be revisited.”

Mashaba emphasised that the decision was the result of “good faith” negotiations between ActionSA and the ANC.

“There will be no VAT increase, not because of any court case that opportunistic parties now seek to falsely claim credit for,” he said.

“But because of principled, good-faith negotiations grounded in substance, rather than extortionist, unpatriotic and shamelessly dishonest politics.”

Mashaba acknowledged the role of the ANC and Godongwana during negotiations, noting that discussions were conducted maturely and, in the country's, best interests.

“Nobody attempted to mislead or dupe anyone else. There was an absolute focus on the budget and nothing else,” he said.

“Let us be clear: the reversal of this VAT increase was not achieved by the parties that were in court on Tuesday.”

He added that the reversal was achieved by political parties willing to set aside differences and demonstrate maturity in exploring alternatives to a VAT hike.

“These parties adopted a fiscal framework with the strict condition that a 30-day period would be used to assess revenue alternatives to a VAT increase,” Mashaba said.

“During this period, we actively participated in submitting alternatives, around which engagements were held to explore their viability. The announcement by the minister this morning, and this press conference, take place within the context of that process.”

Mashaba also criticised some GNU members for relying on litigation instead of negotiations.

“It is indeed quite bizarre that opposition political parties outside of the GNU had to step in and negotiate what a particular political party inside the GNU preferred to pursue through the courts,” he said.

“That is a matter for the GNU to address and not a concern of ActionSA’s.”

“Ultimately, the coalition future of South Africa is based on political parties without majorities having to work together to achieve positive outcomes for the South African people.”

Meanwhile, the GNU will begin reviewing the budget to ensure more efficient state spending.

ANC spokesperson Mahlengi Bhengu-Motsiri confirmed that a revised finance bill is expected to be tabled in Parliament soon.

simon.majadibodu@iol.co.za

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