John Matisonn: The GNU after the VAT and White House clashes

Key topics:DA backs budget deal with zero VAT hike, offset by fuel levy and cutsMajor reform: Govt spending and procurement review set for 2026Omnibus bill to scrap SETAs and cut ANC-linked programmes.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.The auditorium doors will open for BNIC#2 on 10 September 2025 in Hermanus. For more information and tickets, click here..By John Matisonn.Listen to this article instead:.The DA yesterday (Tuesday) informed parliament that it will support the next stage of the budget legislative process after agreement on a zero VAT increase, to be absorbed by the fuel levy and provisional cuts to provincial allocations. But the most important reform to come out of the VAT clash is agreement on a government spending review and a procurement review. The comprehensive spending review must be completed in time to make changes in the budget for February 2026, DA leader John Steenhuisen said in an interview. The spending review is aimed at stopping duplication of tasks in different programmes, ghost workers and programmes that do not achieve their mandate or have become obsolete.An omnibus bill is also being prepared with legislative reforms to go through this year, DA finance spokeserson Dr Mark Burke said in an interview. The omnibus bill will include an amendment to legislation on Sector Education and Training Authorities (SETAs) which will make it possible to scrap them. It will go through this year.The DA’s deputy finance minister, Ashor Sarupen, will be the party’s representative in the spending review process. This is likely to be the most contentious reform for the ANC politically, because most programmes are staffed with ANC members through cadre deployment from Luthuli House. This is the hill the ANC has refused to climb for 31 years, and it is likely to fight every proposed cut. Yet only if substantial cuts can be made in existing programmes will it be possible to reform the economy through long-term increases in infrastructure and other high priorities..Read more:.RW Johnson’s rational perspectives – DA’s options after Budget, US 30% tariff on SA exports.Steenhuisen would like to see enough saving to allow for a cut in personal taxes. Only a small part of the hole in the budget left by free VAT will be filled by the increased fuel levy, and even that will not be felt by consumers, Burke said.The fuel levy will make up just R3.5billion pa, Burke said, and this figure may be lower because petrol prices are set to come down in the coming months. This is because oil prices have hit record lows, and the rand have strengthened against the dollar. The coming cut in petrol prices means that the public is about to pay less for petrol despite the increase in the fuel levy. Some of the lost VAT money will be achieved by lowering the petrol price a little less than if there was no added fuel levy.The lower provincial allocation is provisional, because if the spending review achieves any savings, they will be returned to the provinces. The settlement of the budget dispute and the apparently harmonious outcome of the contentious White House meeting with the Trump administration seem to have improved sentiment in the market. An auction of South African government bonds on Tuesday attracted the strongest demand in almost three months as investors bet the country’s improved outlook and a lower inflation target will boost returns on fixed-income securities.

John Matisonn: The GNU after the VAT and White House clashes

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