South Africa’s National Treasury is proposing a smaller VAT hike of 0.5 percentage points after initial opposition to a 2-point increase. Disputes within the ruling coalition remain, with the Democratic Alliance opposing the budget. A spokesperson for President Ramaphosa expressed confidence in resolving issues for parliamentary approval.
South Africa’s National Treasury recently proposed a reduced increase in value-added tax (VAT) as part of a revised budget. This adjustment seeks to alleviate tensions within the ruling coalition, although there remains uncertainty regarding parliamentary support for the proposal. Initially, a 2-percentage-point hike in VAT was suggested, which faced opposition from coalition partners of the African National Congress, leading to a significant stalemate—an unprecedented situation since the end of apartheid.
The new proposal entails an increase of 0.5 percentage points effective May 1 of this year, bringing the VAT rate from 15% to 15.5%. Another increment of 0.5 percentage points is slated for 2026. Nevertheless, the Democratic Alliance, South Africa’s second-largest political party, expressed its disagreement with the proposed budget, with its leader, John Steenhuisen, articulating strong opposition.
“The DA will not support the budget in its current form,” said Steenhuisen via social media before the finance minister’s announcement. Despite this dissent, a spokesperson for President Cyril Ramaphosa indicated optimism about resolving any outstanding matters, with hopes that the revised budget could ultimately be approved by parliament.
In summary, South Africa’s revised budget includes a smaller VAT increase to promote internal coalition unity amidst significant political disagreement. The proposal reflects a strategic compromise from an initially larger hike, yet it faces rejection from key opposition parties. Continued efforts are being made by leadership to navigate through these disputes for successful parliamentary approval.
Original Source: www.tradingview.com
