The South African government faced protests over a revised budget, proposing a 1% VAT increase. Despite efforts to address economic concerns and infrastructure needs, significant opposition arose from the Democratic Alliance and public demonstrators, highlighting the nation’s struggles with unemployment and inequality.
In Cape Town, South Africa, protests erupted outside the Parliament as protestors from various unions and civil society groups expressed their discontent with the proposed austerity measures, particularly a VAT increase. On Wednesday, Finance Minister Enoch Godongwana revealed a revised budget, suggesting a marginal hike in value-added tax from 15% to 16% by the fiscal year 2026/27, but this proposal was met with immediate opposition, notably from the Democratic Alliance party.
Initially, a two-percentage-point VAT increase was rejected, leading to this revised plan, which introduces a 1% increase, incrementally implemented over two years. Despite the government’s intention to manage inflation without income tax adjustments, Godongwana’s presentation to the parliament received boos. He elaborated on the economic consequences of tax increases, citing potential detriments to investment and employment.
South Africa’s economy is hindered by a staggering unemployment rate exceeding 32%, with young citizens particularly affected. Inequality remains a critical issue, with about two-thirds of the population living in poverty, a legacy of historic injustices. Godongwana emphasized the necessity of addressing urgent service delivery to achieve developmental objectives amid economic struggles marked by lackluster growth and infrastructure failures.
The budget allocates over R1 trillion towards enhancing essential services such as transport, energy, and sanitation. Additionally, it seeks to empower the tax service for better revenue collection amidst significant uncollected taxes. The Democratic Alliance voiced concerns, suggesting the proposed budget could exacerbate poverty levels and threaten the government’s stability due to a lack of anticipated parliamentary support for the budget’s passage.
In summary, the South African government’s revised budget proposed a modest VAT increase amid significant public dissent and opposition from key political parties. It addresses pressing economic needs and infrastructure improvements while grappling with high unemployment and poverty levels. The potential rejection of the budget by the Democratic Alliance indicates ongoing challenges for the governmental unity and efforts to stimulate economic growth.
Original Source: www.nzherald.co.nz
