South Africa's Budget Faces Uncertainty Over VAT Hike Disputes
Finance Minister Enoch Godongwana's revised budget, proposing a smaller VAT increase, struggles to gain parliamentary support from coalition parties.
- South Africa's finance minister scaled back a proposed VAT hike from 2 percentage points to 1 point, spread over two years, in an effort to secure parliamentary approval.
- The Democratic Alliance, a key coalition partner, remains opposed to any tax increases, creating a major hurdle for the budget's passage.
- The revised budget includes over one trillion rands in spending on critical infrastructure projects, including energy, transport, and water systems, over three years.
- Finance Minister Godongwana emphasized that cutting the VAT hike would require lawmakers to specify alternative expenditure cuts to address the nation's fiscal challenges.
- The budget marks a significant test for South Africa's fragile coalition government, formed after the ANC lost its parliamentary majority for the first time since apartheid.