Democratic Alliance (DA) Federal Council chairperson Helen Zille outside the Western Cape High Court. The party filed an urgent application to interdict the implementation of the 0.5% value-added tax (VAT) increase.
Image: Armand Hough / Independent Newspapers
The DA's Federal Executive was Thursday night locked in a meeting to decide on its future in the Government of National Unity (GNU), having been dealt a huge blow after its coalition partners, with the help of ActionSA, managed to have the proposed budget adopted in the National Assembly.
DA federal council chairperson Helen Zille said her party had met for 90 minutes and began its discussions on the current situation in relation to the Budget, economic reform, the VAT increase and the DA's position in the GNU.
“These discussions are not yet final and will be ongoing,” she said.
Earlier the party filed an urgent application in the Western Cape High Court to interdict the VAT increase and also set aside the parliamentary process that adopted the Fiscal Framework Policy and Revenue Proposals.
In court papers, Zille asked the court to set aside the adoption of the fiscal framework and send the report back to the finance committees.
The party also wants the court to interdict the VAT increase on May 1, pending the final determination of the Part B application. Part B challenges the legislative provision that granted Finance Minister Enoch Godongwana power to amend the VAT rate.
Zille said the resolutions to adopt the fiscal framework reports were fatally irregular and unlawful.
The committees did not vote on the wording of the final report, and though the report contained a statement accepting the fiscal framework, it can hardly be described as “clear” since the report “recommends” that Godongwana “facilitates the receipt of substitute revenue proposals” to replace VAT increase.
“This relief is urgent. If the Budget process continues, it will be tainted by this illegality. South Africa’s economy cannot afford uncertainties about whether its Budget was adopted lawfully or not. The matter needs to be resolved swiftly so that a lawful process may be undertaken,” she said in court papers.
Her party participated and was defeated in the voting process following the Parliamentary debate on Wednesday. However, Zille said the DA was determined that it would succeed in its plan to stop the VAT increase on May 1 as announced by Godongwana.
“All of these people who are under the mistaken illusion that ActionSA has stopped VAT are just as that; deluded. In fact, the fiscal framework passed by Parliament on Wednesday included a VAT increase,” she said.
“The notice put out by Parliament says the VAT increase will come on May 1. If ActionSA still believes they stopped it, they live in cuckoo land,” the DA’s federal chairperson said.
She maintained that the DA was not in the GNU for “blue lights, cars, ministerial homes of status”.
“We are in that GNU for one sole purpose, to get the South African economy to grow at the rate it needs to grow in order to absorb more people into productive employment.”
ActionSA parliamentary leader Athol Trollip said the DA was within its right to pursue legal action.
“We encourage them in fact to do that,” Trollip told journalists in Parliament.
He also said they remained committed to shielding ordinary South Africans from tax hikes.
He said the budgeting process still involved multiple bills that will be voted on over the coming months.
“Our support remains conditional on the strict fulfilment of the agreement to scrap the VAT increase and income tax bracket creep through alternative proposals - several of which we have already outlined.”
Trolip did not rule out the possibility of ActionSA joining the GNU if the DA were to be removed or walk out.
Addressing the Gauteng investment conference on Thursday, Deputy President Paul Mashatile said: “Ours is a commitment to redress and transform not only our economy, but the lives of our people as well. Any view on the budget that seeks to reject the commitment our government has to the vulnerable, and marginalised, is not a budget that is for the people and must therefore be rejected unequivocally.
“This budget process has, among other things, highlighted that in South Africa, democracy exists and that it works. As we continue our efforts towards building an equal, united and prosperous society we should be encouraged by this. Our country is a country determined to achieve growth and provide a quality of life for all South Africans.”
Policy analyst and researcher Nkosikhulule Nyembezi said the DA must rethink its strategy as the challenging economic environment forces the government to be more creative.
“Core DA supporters traditionally cast a wary eye at strong government control over the economy and various aspects of citizens’ private lives, but in an era of tight budgets and resistance to raising taxes, strong government investment in public infrastructure and social programmes might be the best option left to boost private investor confidence and keep the multiparty legislatures together for the next five years.
"Recently the ANC has demonstrated its determination to play a leading role in the coalition government by tabling a budget to entice public-private partnership investments in different sectors of the economy. Core DA supporters hate to see strong government control over public investments and the broader economy. Other political parties are more interested in solving problems one step at a time.”
Cape Times