South Africa’s cabinet was still negotiating the 2025 budget shortly before the scheduled presentation, having previously postponed it due to disagreements over a VAT hike. The Democratic Alliance’s opposition to the increase has resulted in an unprecedented standoff in coalition governance. A government spokesperson expressed confidence in reaching a compromise, but indications suggest that agreement from the DA remains unfulfilled before the budget speech.
South Africa’s cabinet continued its deliberations on the 2025 budget just an hour prior to the scheduled presentation by the finance minister in parliament. This delay occurred after the budget was initially set for release three weeks earlier but was postponed due to disagreements within the coalition government regarding a proposed two-percentage-point increase in value-added tax (VAT), raising it to 17%.
The Democratic Alliance (DA), the second-largest party in the coalition led by the African National Congress (ANC), has been firm in its opposition to the VAT increase. This situation marks a significant impasse in South Africa’s fiscal policy discussions, being the first of its kind since the country transitioned from apartheid.
Despite the complexities, President Cyril Ramaphosa’s spokesperson expressed confidence that remaining issues could be resolved to ensure the budget’s enactment. Vincent Magwenya stated, “A careful balance has been struck and all the necessary compromises have been made on issues related to the budget. The DA must support the revised version of the budget as it aligns to some of their proposals.”
Nonetheless, minutes before the budget speech was to commence, sources from the DA indicated they had yet to agree on supporting the revised budget proposal, highlighting the ongoing tensions within the coalition.
The ongoing deliberations regarding South Africa’s 2025 budget illustrate the complexities of coalition governance, particularly concerning tax policy. The impasse over the proposed VAT increase signifies significant opposition within the coalition, specifically from the Democratic Alliance. Nevertheless, government representatives express optimism about resolving the remaining issues before the final budget presentation, underscoring a commitment to compromise and collaboration amidst political challenges.
Original Source: www.marketscreener.com
