THE African National Congress (ANC) National Working Committee (NWC) has decided to maintain its working relationship with the Democratic Alliance (DA) within the Government of National Unity (GNU).

This decision comes despite intense opposition related to the recently approved 0.5% Value Added Tax (VAT) hike proposed by the National Treasury.

The decision to raise VAT by 0.5% has ignited considerable backlash, particularly among opposition parties.

The DA has condemned the hike, arguing that it disproportionately burdens low-income individuals and the working class, exacerbating existing economic inequalities.

The DA has initiated legal proceedings to contest the VAT increase in response to what they view as an injustice.

ANC's stance on coalition

During a media briefing on Tuesday, ANC secretary-general Fikile Mbalula announced the decision to continue the coalition with the DA.

He emphasised that the ANC would not remove the DA from the GNU, stating that the DA would decide its future participation in the coalition.

Despite opposing the VAT increase, the DA has publicly reaffirmed its commitment to the alliance.

Parliamentary vote dynamics

In the parliamentary vote regarding the VAT hike, the ANC and its allies supported the increase. At the same time, the DA, along with the Economic Freedom Fighters (EFF), the uMkhonto weSizwe (MK) party, and the Freedom Front Plus (FF Plus), opposed it.

The ANC's majority enabled the passage of the VAT increase with the help of ActionSA, IFP, BOSA, and other smaller parties.

Future implications and agreements

Opposition parties have vowed to continue their fight against what they view as a regressive tax policy, and the DA's court case will unfold in the coming weeks.

If the court rules in its favour, implementing the VAT hike could be delayed.

Meanwhile, following an agreement with ActionSA to support the 2025 Budget, the ANC acknowledged the Treasury's challenges in finding alternatives to reverse the VAT increase.

This agreement stipulates that the VAT increase would be scrapped within 30 days and includes inflation adjustments for personal income tax to prevent bracket creep.