Calls for Godongwana’s resignation grow over VAT blunder

Lungani Zungu and Mashudu Sadike

THE noose is tightening around the neck of Finance Minister Enoch Godongwana following the controversial Value Added Tax (VAT) increase blunder, which has sparked legal battles, public outrage, and deep political divisions within the Government of National Unity (GNU).

Veteran economist Dawie Roodt, who has analysed South African budgets for four decades, made his feelings know during a candid interview with the Daily News, where he called for Godongwana’s immediate resignation.

“This is unprecedented. In the 40 years I have analysed this country’s budgets, I’ve never seen a finance minister make such a serious misstep,” said Roodt.

Roodt's utterances come amid the rising calls for Godongwana’s resignation or sacking by President Cyril Ramaphosa, who has the powers to appoint and remove Cabinet ministers. 

Roodt also called on Ramaphosa, who made Godongwana's appointment in 2021 to the plum position of handling the country’s purse, to step down. 

The initial proposal to increase VAT by 2% triggered strong backlash from political parties, trade unions, and civil society. Under intense pressure, Godongwana revised the proposal to a 0.5% hike, but this too was challenged in court by the Democratic Alliance (DA) and the Economic Freedom Fighters (EFF). 

Before the court could rule, Godongwana caved in, withdrawing the proposal, citing an out of court legal settlement with the DA.

The Western Cape High Court later suspended the VAT increase and set aside the 2025 Fiscal Framework and Revenue Proposals, which only served to intensify the scrutiny on the minister. 

Despite the U-turn, Godongwana maintained that the proposal was both constitutional and necessary, considering a R75 billion shortfall in the national budget.

Roodt said the VAT blunder had far-reaching implications for South Africa’s economy. “Markets have lost confidence. Investors were watching this chaos and re-evaluating their positions,” he warned.

Political backlash has been fierce with the EFF and the uMkhonto weSizwe Party (MK Party), led by Julius Malema and Jacob Zuma respectively, having been vocal in demanding Godongwana’s resignation. 

The MK Party has gone a step further, tabling a motion of no confidence in him in Parliament and accused the minister of fiscal mismanagement and promoting “neoliberal dogma.”

“South Africans deserve leadership that rejected austerity and market fundamentalism,” the MK Party said. It called for nationalising the South African Reserve Bank and mandating it to focus on growth and employment alongside inflation control.

MK Party spokesperson Nhlamulo Ndhlela also criticised the GNU’s Economic Reconstruction and Recovery Plan (ERRP), calling it a “blueprint for mass impoverishment.” 

He accused the ANC and DA of engaging in a political charade while advancing similar policies that deepen inequality.

EFF leader Malema echoed the demand for Godongwana to step down, noting that the finance minister’s missteps had left South Africa without an approved budget nearly three months after the State of the Nation Address in February. “How can a government function without a budget?” Malema asked.

Independent political analyst Thobani Zikalala agreed that the crisis extended beyond Godongwana. “This isn’t just about one man. The entire Cabinet, including the president, must take responsibility for this failure,” he said.

Zikalala questioned whether the GNU could be trusted to govern. “They can’t even agree on a fiscal framework. How can South Africans have confidence in a government that’s still squabbling over the basics?”

The DA, a key partner of the GNU, has been vocal against VAT hike which has caused serious cracks in the GNU formed after the last year's national elections failed to produce an outright winner.

The other parties that were in the GNU were IFP, the PAC, Freedom Front Plus, UDM, Rise Mzansi, Al Jama-ah, Patriotic Alliance and GOOD Party.

The ANC, while defending Godongwana, acknowledged the legal ruling as providing “certainty” and said Parliament must now determine how to proceed with revenue and expenditure adjustments.

Meanwhile, the South African Revenue Service (SARS) has warned of the practical implications of reversing the VAT hike. SARS Commissioner Edward Kieswetter said vendors must continue charging VAT at the standard 15%, not the planned 15.5%. “SARS will ensure all necessary adjustments are made to implement the reversal,” he said.

The debacle has raised broader concerns about the GNU’s ability to manage the economy during a time of escalating fiscal pressure. With investor confidence shaken and South Africans increasingly disillusioned, the future of Godongwana, president Ramaphosa and possibly more members of the Cabinet, hangs in the balance.

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