South Africa’s National Treasury has proposed a smaller VAT increase of 0.5% amid coalition disagreements over a previous 2% hike. The changes are aimed at securing parliamentary support. However, the Democratic Alliance remains opposed, while the president’s spokesperson expressed hope for resolution.
On Wednesday, South Africa’s National Treasury proposed a modest increase in the value-added tax (VAT) in a revised budget designed to address tensions within the ruling coalition. The proposal aimed to facilitate progress towards parliamentary approval amidst ongoing disagreements. Previously, an initial budget included a more significant 2-percentage-point VAT hike, which faced opposition from the African National Congress’s (ANC) coalition partners and resulted in a political stalemate unseen since apartheid ended.
The revised proposal suggests a VAT increase of 0.5 percentage points, raising it from 15% effective May 1, with an additional increase planned for 2026. This new approach seeks to build consensus in the coalition government. However, John Steenhuisen, leader of the Democratic Alliance, which is the second-largest party, confirmed on social media that his party remains opposed to the budget as it stands.
Despite the challenges, a spokesperson for President Cyril Ramaphosa expressed optimism, indicating confidence that any outstanding concerns could be resolved to ensure the budget’s passage in Parliament.
In summary, South Africa has put forth a revised budget proposing a smaller VAT hike in response to internal coalition disagreements. While the new plan aims to facilitate legislative approval, opposition remains from key political entities. Optimism from the presidential office offers a glimmer of hope for overcoming potential barriers.
Original Source: www.tradingview.com
