As the Government of National Unity hangs in the balance, a full document outlining the near-finalised deal between the ANC and the DA has surfaced, confirming in detail that the talks extended well beyond the contentious VAT hike.
The document shows that the DA was prepared to support the short-term 0.5% VAT increase for this year—but only if it was paired with a series of reforms aimed at accelerating economic growth and stabilizing the country’s fiscal position.
At the heart of the deadlock was not the 0.5% VAT hike itself, but whether the ANC was willing to engage in genuine power-sharing and collaborate meaningfully with the DA under the GNU.
Sources suggest the deal was close to being finalized before smaller parties, such as ActionSA, stepped in to offer the ANC their support on the budget—undermining the DA’s negotiating position.
A 1% VAT increase over the next two years now appears likely, despite the DA’s court challenge seeking to overturn the entire fiscal framework.
The DA’s conditions for supporting the VAT increase included:
- A set of accelerated growth reforms,
- A spending review to identify R50–R100 billion in recurring savings, and
- A clear commitment to reduce the tax burden over the next two years.
Key actions outlined in the draft agreement included private sector participation in ports and rail, new passenger rail concessions, comprehensive energy sector reform, independent Transmission Projects to expand grid capacity, and a digital transformation of government services.
A thorough review of government spending was also central to the proposed deal. This would have focused on cutting or scaling down underperforming programmes, conducting a nationwide ghost employee audit, and selling or consolidating non-strategic public assets.
Read the full document HERE.
