The South African Government of National Unity is grappling with a budget crisis due to conflicting proposals from its two main parties. The ANC suggests raising the Value Added Tax to fund social programs, while the DA calls for reductions in public spending. This conflict has ignited public protests and significant opposition from unions, highlighting the challenges faced by the working class amid rising costs and austerity measures.
In March 2025, South Africa’s Government of National Unity, composed of its two largest parties, the African National Congress (ANC) and the Democratic Alliance (DA), faced a significant budget crisis due to their differing approaches. The ANC proposed increasing the Value Added Tax (VAT) from 15% to 17% to fund social programs, while the DA advocated for cuts in public expenditure, exacerbating the plight of the working class amidst rising living costs.
This budget crisis marks the first time in South Africa’s post-Apartheid history that a budget has not been presented on schedule. The ANC’s proposal drew severe criticism from prominent unions like the National Union of Metalworkers of South Africa (NUMSA), highlighting that many individuals already struggle to meet basic needs, with 60% of their wages allocated to essential expenses and looming tariff hikes making matters worse.
Additionally, the Congress of South African Trade Unions (COSATU) opposed the tax increase, suggesting it would prioritize revenues over the welfare of workers. COSATU emphasized the importance of addressing the needs of families rather than focusing on financial metrics ahead of the upcoming local elections in 2026 to prevent further disillusionment among supporters.
The ANC’s actions have also caused friction with the South African Communist Party (SACP), which decried the VAT hike, asserting it would deepen poverty and hunger among South Africans. The SACP criticized the ANC for not consulting with them before forming the budget proposal, indicating a disconnect from the concerns of its leftist allies.
Despite pressures from left-wing factions, the ANC turned to the DA for support, despite previous opposition to the DA’s fiscal policies. The DA itself has faced scrutiny for its historically anti-poor stance even as they momentarily aligned with the ANC against the VAT increase, showcasing the complexities and contradictions inherent to the current coalition government.
Public backlash was evident with protests against proposed cuts and the VAT hike leading up to the budget presentation. The Treasury’s prediction that the VAT increase would generate R60 billion has been met with skepticism, recalling a similar situation when a VAT rise in 2018 fell short of revenue expectations.
Trade unions and other organizations, such as the South African Federation of Trade Unions (SAFTU), have called for taxes on the wealthy instead of burdening the working class further. They advised that effective regulation on loopholes could raise significant revenues without punishing the poor, underscoring a need for more equitable taxation methods.
On the day of the budget presentation, the Speaker announced its postponement due to a lack of agreement on proposals from both parties in the executive. Opposition leaders highlighted this as a sign of governmental failure and called for accountability, marking a critical moment in South Africa’s political landscape.
Amidst this fiscal turmoil, NUMSA cautioned against misconceptions about the DA’s intentions, emphasizing that their rejection of the VAT hike does not equate to genuine support for the working class. The DA’s proposal for cuts to social programs, primarily impacting marginalized communities, raises concerns about their commitment to equitable governance and justice in resource allocation.
The ongoing budget crisis in South Africa reveals deep ideological divides within the Government of National Unity, illustrating conflicting strategies between the ANC and the DA. The proposed VAT increase is met with substantial opposition from unions and coalition partners, emphasizing its potential adverse effects on the working class. As protests emerge, the lack of a unified response reflects broader governance challenges that threaten equitable societal advancement. The need for a strategic shift towards fairer taxation remains urgent to address the needs of South Africa’s impoverished population effectively.
Original Source: indepthnews.net
