South Africa

A Bold move or the end? The DA, the ANC, and the Value Added Tax (VAT) strains on the Government of National Unity

South Africa’s experiment in coalition governance is entering a dangerous phase. Just under a year since the African National Congress (ANC) and the Democratic Alliance (DA) shook hands on a Government of National Unity (GNU), the alliance now teeters on the brink. While the immediate issue appears to be the DA’s opposition to a proposed VAT increase, this moment represents something more profound: a test of whether this GNU is a genuine coalition of governance or simply a political fig leaf masking ANC dominance.

The DA's defiant stance may appear reckless to an external observer, particularly a German one familiar with complex coalition arrangements. Nevertheless, it is arguably a necessary assertion of principle and purpose in context. After all, South Africa is not Germany. Our coalition culture is new, our institutions still young, and the stakes are high.

The DA’s walkout from the budget negotiations and threats to leave the GNU altogether have stunned many in the political establishment. Critics accuse the party of jeopardising national stability for political gain. However, the DA’s position is rooted in ongoing frustrations. It entered the GNU hoping to champion economic reform, fiscal discipline, and good governance. Instead, it has found itself repeatedly sidelined at critical moments.

Since the GNU’s inception, the DA has lost key battles over education (the BELA Bill), health policy (the controversial National Health Insurance Bill), and land reform (renewed moves to revive expropriation without compensation). These were not minor disagreements but fundamental ideological splits, particularly on economic freedom, state power, and constitutional protections.

These defeats have reinforced a core question: can the DA influence policy from within the GNU, or is it merely there to legitimise ANC rule?

This week’s showdown over VAT is not about a single tax policy but about advantage. For the DA, the economy is its most valuable policy portfolio and the area where it claims expertise. If it cannot shape economic direction — including taxation, expenditure, and public sector reform — then it has little reason to remain in the GNU.

There are echoes here of Germany’s recent political experiences. The Free Democratic Party (FDP), under Lindner, a coalition partner in Chancellor Olaf Scholz’s "traffic light" government, faced internal pressures for appearing too compromising. One wonders: had the FDP been firmer in the coalition's early days, might it have secured influence that is more decisive? Instead, it got cornered on issues like debt rules, digitalisation, and civil liberties. In South Africa, the DA appears determined not to repeat that mistake.

The VAT clash between the DA and the ANC represents a critical flashpoint in South Africa's ongoing coalition politics. The ANC's proposal to increase the Value Added Tax (VAT) stems from its need to address the country's spiralling budget deficits and bolster public service funding. However, the DA vehemently opposes this increase, branding it as a regressive measure that disproportionately impacts the most vulnerable citizens. The party argues that instead of seeking new sources of revenue through tax hikes, the government should prioritise effective spending and tackle corruption within its ranks.

The DA’s concerns are not just ideological; they have tangible implications for ordinary South Africans. A VAT increase would raise the cost of essential goods and services, further straining household budgets already affected by inflation and economic stagnation. The DA has framed its opposition as a necessary defence of the working class, emphasising the need for economic policies that promote growth and stability rather than punitive taxation.

This clash is not merely about tax policy — it encapsulates the broader ideological divide between the two parties regarding economic management. The DA advocates market-driven policies and accountability, while the ANC often leans towards state intervention and broader wealth distribution strategies. The DA fears that yielding to the ANC's tax proposals will undermine its goals within the GNU and set a concerning precedent for future governance.

The showdown over VAT also raises questions about the GNU's efficacy. Should the DA back down, it risks being seen as abandoning its principles, leading to a loss of credibility with its supporters and the broader electorate. Conversely, should it maintain its stance and either withdraw from the GNU or significantly alter its terms, it could create a vacuum in governance, destabilising the fragile coalition.

Moreover, the implications of this clash are far-reaching. A DA withdrawal could lead to the ANC seeking alliances with more radical parties, shifting policy priorities further away from fiscal conservatism and economic stability. This potential shift raises alarm about a subsequent retreat from democratic norms and financial prudence, possibly steering South Africa toward a more populist and radical economic approach.

The risk, of course, is that boldness begets instability. If the DA walks away, the ANC will be forced to seek new partners — worryingly for democratic moderates, the Economic Freedom Fighters or the newly resurgent uMkhonto we Sizwe Party. That could mark a sharp turn away from economic prudence and constitutional restraint.

Alternatively, suppose the DA stays in the GNU but emerges from this crisis having reasserted its relevance. In that case, it may strengthen its position and the credibility of coalition politics more broadly. For coalitions to work, they must allow for differences and disputes and still deliver.

In Germany, coalition governance is grounded by formal agreements, negotiated compromises, and an embedded political culture that tolerates ideological friction. South Africa is still developing those muscles. This VAT clash, and what follows, will determine whether we are ready for the maturity that coalition politics demands — or whether we are still trapped in the zero-sum, winner-takes-all logic of the past.

Ultimately, the outcome of this VAT clash will not only define the relationship between the ANC and the DA but will also serve as a litmus test for South Africa's broader political maturity and the future of coalition governance in the country. The stakes are high, and the decisions made in this moment will resonate far into South Africa's political landscape.

Either way, the DA’s stance marks a watershed moment. It may be remembered as a miscalculation — or as the moment South Africa’s new political era truly began.