Helen Zille reveals ANC's secret settlement attempt over VAT hike

THE BATTLE between the two largest parties in the Government of National Unity (GNU) over value-added tax (VAT) continues, with DA federal chairperson Helen Zille accusing the ANC of trying to take credit for stopping the proposed increase while Treasury requested to settle the matter out of court.

Zille, during the DA’s briefing on the recent VAT court victory, said she received a call from the party’s lawyers saying Finance Minister Enoch Godongwana wanted to settle the matter out of court. 

She said it became clear that the ANC had been informed of the approach after the governing party cancelled their meeting and announced that it would hold a press briefing with small parties on April 24. 

Zille said the DA realised that the ANC would be forced to withdraw the VAT increase decision because of the case brought by the opposition party. 

She said the DA decided to put facts on the table and organise a media briefing on April 24, because the ANC wanted to credit smaller parties for this.

She said this was the reason the DA continued with the case despite Godongwana's request and his decision to suspend the proposed increase.

The VAT rate hike was initially introduced in the 2025 Budget Speech, delivered on March 12, 2025. In that speech, Godongwana announced a two-step increase in the standard VAT rate: 

• An increase from the current rate of 15% to 15.5%, originally planned to be effective by May 1. 
• A second increase - bringing the VAT rate to 16% - was expected from April 1, 2026, subject to the passing of enabling legislation by Parliament within 12 months. 

However, on April 27, the Western Cape High ordered that a proposed increase in the VAT rate be suspended, formally scrapping the measure. 

This was after Godongwana withdrew his opposition to the application, saying in an affidavit filed on the same day that he had done so after realising that he had no political support for a VAT increase, and after he received a letter from the National Assembly Speaker, Thoko Didiza, asking him to table alternative revenue proposals.

During the media briefing last week, the ANC said this was a political decision that was reached after substantive engagement between the leading party and 10 other parties in Parliament. The parties include the Inkatha Freedom Party (IFP), ActionSA, Pan Africanist Congress (PAC), Rise Mzansi, Build One South Africa (Bosa), United Democratic Movement (UDM), Al Jama-ah, Patriotic Alliance (PA), GOOD Party and the National Coloured Council (NCC). 

The party said Godongwana communicated a new process to adopt the revised fiscal framework that will be tabled on May 21. 

The parties represented at the briefing also agreed that the DA’s court case did not influence the reversal of the VAT increase, adding that the party was claiming an undeserved and easy victory.

Zille said the ANC wanted to reach a secret out-of-court settlement while holding a press conference to pretend that the smaller parties had achieved this. 

She added that Godongwana’s lawyers approached the DA’s lawyers for a settlement because they knew they had a weak case in court.

“In telling the rest of the ANC about the planned out-of-court settlement, the condition of confidentiality had been breached - by the ANC,” Zille said. 

“So we went to the public about the approach of the ANC's lawyers, to show that they knew they were going to lose the court case, but they wanted to get out of it by giving kudos to the smaller parties. We don't like these games. We prefer the facts. So we put the facts on the table,” she said. 

Zille said the ANC then instructed their lawyers to withdraw the settlement offer. 

“So we tabled a new affidavit to seek a court nullification of the VAT increase on Friday (can't recall the exact date) and by Sunday our lawyers had re-negotiated a settlement agreement in which the Minister and the Speaker agreed to the nullification of the Fiscal Framework and agreed to each pay 50% of our costs,” she said, adding that the ANC is fed-up because the DA pulled the rug from under their strategy.