The ANC and ActionSA Chose Tax Over Growth

The speech below was delivered by the DA Head of Policy, Mat Cuthbert MP during a debate in Parliament on the 2025 Budget:

Honourable Speaker,

Yesterday, we witnessed the ANC and Action SA choose taxing South Africans over growing the economy.

They chose to undermine their partners as they could not accept that they were only a 39% party and were now obligated to create a shared economic vision for our country.

A vision that would grow the economy, create jobs, and lift millions of South Africans out of poverty and into prosperity.

Instead of working with its largest partner in the GNU, the ANC decided to collude with a band of bitter exes, has-beens, and opportunists, otherwise known as Action SA.

A party with a demonstrable record of sacrificing good governance and growth at the altar of expediency.

One only has to look at the cities of Tshwane and Johannesburg, where these two parties colluded to install coalitions of corruption at the expense of critical service delivery.

As they attempted to spin their misdeeds to voters in these two cities at the time, they followed the same playbook yesterday.

Firstly, the finance committee had only two options: it could either accept or amend the existing fiscal framework as empowered by the Money Matters and Related Procedures Amendment Act of 2017.

On this score, the ANC, IFP, and Action SA voted in favour of the existing fiscal framework, which included a 0.5 percentage point VAT increase and the non-adjustment of personal income tax brackets for inflation, commonly referred to as “bracket creep”.

However, they desperately tried to buy themselves cover by inserting non-binding recommendations into the committee’s report, which requested that the National Treasury revise the budget within thirty days.

So, despite the snake oil Action SA sold to the South African public last night, the National Treasury has no legal obligation to amend this bill if it passes in today’s sitting.

Secondly, the financially illiterate Honourable Beesly confidently stated that his proposal would amount to a R28 billion reduction on the revenue side of the balance sheet. However, if one were to remove both the VAT increase and “bracket creep”, the actual amount would be R31.5 billion.

Worst of all, he had no idea where the National Treasury would find the money to plug the gaping hole left in the fiscus.

Simply put, the National Treasury only has two options: cut or borrow.

To make it abundantly clear to members of the public, Action SA capitulated to the ANC’s misguided policy of taxing South Africans and undermining the economic reform agenda.

In contrast, the DA has remained resolute in its opposition to any new taxes and succeeded in blocking the initial 2 percentage point VAT hike from the budget tabled on February 19th.

Furthermore, the DA submitted a fully costed alternative to the existing fiscal framework, which would have generated R27.2 billion in savings from national departments alone.

These savings could have been used to eliminate the need for any tax hikes and prioritise expenditure towards growth-enhancing reforms.

However, the DA did not stop there. We proposed a comprehensive overhaul of the country’s economic policy to address the following critical issues:

A GDP growth rate that has remained capped at 1.3% from 2008 to 2024 and cannot keep up with the annual population growth rate.

This is best demonstrated by the fact that South Africans, on average, have become poorer over the years, with GDP per capita declining from $7973.5 in 2010 to $6,022.5 in 2023.

An expanded unemployment rate that has increased from 31.5% to 41.9% between 1994 and 2024, which means that millions of South Africans have joined the unemployment queues on an annual basis.

Even more concerning is that our children are not equipped with the necessary education and skills to gain meaningful employment, as illustrated by the 59.6% youth unemployment rate.

Previous ANC governments have also led us to the brink of fiscal collapse, with our debt-to-GDP ratio having risen rapidly from 44.3% in 2014 to 77.3% in 2024, while debt repayments consume 21% of all government revenue.

If the rest of these metrics did not make the ANC think twice about the need for meaningful economic reform, they should look at the trend line from the BER’s Business Confidence Index, which had an average score of 36 out of 100 between 2014 and 2024.

If the businesses we expect to invest in our country and create jobs lack faith in the government’s policy direction, we have no hope of addressing the frightening poly-crisis facing our economy.

This is why we remain resolute in our call for the following bold economic reforms:

Pursuing an aggressive debt-reduction strategy to ensure that we live within our means and do not allow debt repayments to crowd out the expenditure on frontline services.

Expediting the private sector’s involvement in electricity generation and transmission to create a truly competitive energy market.

Finalising port and rail concession agreements with private partners to enhance competitiveness and position ourselves as an export-oriented economy.

Scrapping duties on manufactured goods not produced in South Africa and other localisation policies that hinder trade and make goods more expensive for consumers.

Removing the extension of collective bargaining council wage agreements for SMMEs, which hinders hiring and adds to the number of South Africans in the unemployment queues.

Honourable Speaker, the choice before us today is clear.

Those parties voting in favour of the fiscal framework will betray the voters who elected them to this very House.

My only advice to these parties is: Good luck explaining this to your voters at the local government elections next year, and do not be surprised when they punish your expediency at the voting booth.