South Africa’s Finance Minister Enoch Godongwana stated that the national budget may be revised following discussions among political parties, as significant opposition remains concerning a proposed VAT increase. The ANC requires support to pass the budget amidst significant political challenges. Godongwana emphasized potential trade-offs and the urgency for parliamentary approval.
In a recent interview, South Africa’s Finance Minister Enoch Godongwana indicated that the national budget may undergo further revisions. The discussions aim to bridge gaps among political parties concerning a proposed increase in value-added tax (VAT). While the revised budget proposed a moderate VAT increase of 1 percentage point over two years, it faced widespread rejection from major parliamentary parties, including the Democratic Alliance, which opposes tax hikes.
Godongwana’s African National Congress (ANC) requires support from at least one significant party for the budget’s approval. This situation presents a substantial challenge, as the coalition government formed following the ANC’s loss of its parliamentary majority last year must navigate substantial opposition. “There will be engagement which may lead to some amendments in the budget. It is the nature of the thing,” Godongwana remarked.
He expressed a willingness to consider suggestions for budget changes but emphasized the complexity of potential trade-offs. If the proposed VAT increase, which is projected to generate 14 billion rand, is eliminated, lawmakers must identify corresponding expenditure cuts. Suggestions to save by reducing the size of the cabinet, according to Godongwana, would not generate sufficient funds to maintain critical services such as health and education.
Godongwana foresees this budget as potentially the most contentious in years, especially since the government is unlikely to propose additional tax increases in the near future. He believes that while the budget’s trajectory could be favorable regarding public debt and deficit reduction, the primary concern of ratings agencies will be its passage through parliament. “That’s a test we’ve got to pass,” he asserted.
In summary, South Africa’s budget is currently under scrutiny as discussions among political parties proceed. There is substantial opposition to the proposed VAT increase, and Minister Godongwana remains open to amendments, although he cautions about the associated trade-offs. The passage of this budget is anticipated to be critical, not only for fiscal policy but also as an indication of the government’s capability to govern effectively in a coalition environment.
Original Source: money.usnews.com
