South Africa’s National Treasury proposed a smaller VAT hike in its revised budget aiming to unify the ruling coalition. The new 0.5 percentage-point increase is set for May 1, with another planned for 2026. The Democratic Alliance remains opposed, complicating budget approval, though some optimism exists for resolving outstanding issues.
On Wednesday, South Africa’s National Treasury presented a revised budget featuring a smaller hike in the value-added tax (VAT), intended to mitigate tensions within the ruling coalition. The previous proposal included a 2-percentage-point increase, which faced opposition from coalition partners, resulting in a stalemate unprecedented since apartheid’s end.
The new proposition seeks to raise VAT by 0.5 percentage points from the current 15% starting May 1, followed by an additional 0.5-percentage-point increase in 2026. Despite these adjustments, uncertainty persists regarding parliamentary support for the budget.
Shortly before the finance minister’s announcement, Democratic Alliance leader John Steenhuisen expressed his party’s ongoing disagreement, stating, “The DA will not support the budget in its current form.” However, President Cyril Ramaphosa’s spokesperson indicated that there is optimism about resolving outstanding issues to facilitate budget approval.
The proposed smaller VAT hike reflects the South African government’s attempt to navigate coalition dynamics while seeking a path forward for budget approval. While the adjustments may ease tensions, significant opposition remains, notably from the Democratic Alliance, leaving the outcome of the budget vote uncertain. The government’s ongoing dialogue suggests a commitment to resolving differences for the budget’s passage.
Original Source: www.tradingview.com
