Finance Minister Enoch Godongwana has firmly stated he will not resign after the government withdrew the controversial VAT increase, despite political backlash and calls from opposition parties.
Opposition Forces Government U-turn
According to Reuters, Enoch Godongwana defended his role in proposing the now-abandoned tax hike during the IMF and World Bank spring meetings in Washington on Thursday.
He stated, “My job is to introduce money bills nothing says they must be popular.” Firmly rejecting calls for his resignation.
The planned VAT increase would have raised the rate from 15% to 15.5% in May, with another rise to 16% scheduled for 2026.
It was part of the government’s effort to close a projected R75 billion shortfall in the medium-term budget.
The government proposed the VAT increase to close a budget gap. But the Democratic Alliance (DA), South Africa’s second-largest party and a partner in the unity government, fiercely opposed the move, according to AP News.
After voting against the budget in Parliament, the DA challenged the proposal in court — a legal battle that ended with the government withdrawing the increase.
The DA hailed the decision as a victory for the country, especially for low-income households.
Fiscal Fallout and Political Pressure
The reversal has left a significant gap in the national budget, adding to the pressure on Godongwana.
Despite this, he defended the original intent of the VAT increase. Arguing that its withdrawal would negatively impact the government’s ability to fund essential programmes.
“I still maintain that if the purpose for which the VAT was raised is taken into account. Its reversal will have a negative impact on those issues that cannot be disputed,” he said.
All Eyes on the Budget Rewrite
The Finance Minister now faces the difficult task of presenting a new fiscal framework that balances declining revenue with growing public needs.
Credit rating agencies such as S&P Global Ratings, which currently holds a positive outlook on South Africa. Will be closely monitoring how the Treasury adjusts its plans.
Godongwana remains unfazed by the political noise.
“If you ask me, I don’t think what will inform them is the noise,” he said. “What will trigger them is whether the final product is a sustainable budget.”
Should Godongwana resign over the VAT hike reversal?
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