Finance Minister Enoch Godongwana faces significant challenges with the 2025 budget amid strife within the coalition government, particularly with the DA. The budget, delayed due to opposition against VAT hikes, was presented with a revised VAT increase aimed at addressing spending needs. However, strong opposition remains, complicating prospects for passage and raising questions about the coalition’s future.
South Africa’s Finance Minister Enoch Godongwana is facing significant political challenges as divisions emerge within the coalition government over the 2025 national budget, which was introduced after a month-long delay. Analysts have noted that without the support of the Democratic Alliance (DA), the government risks failing to pass the budget, necessitating the reconsideration of contentious policies or support from larger opposition parties.
The budget’s initial proposal to increase value-added tax (VAT) from 15% to 17% met with severe backlash, leading to its postponement—marking the first such delay since apartheid ended in 1994. After negotiating with coalition partners, Godongwana presented a “bold and pragmatic” budget that proposed a smaller, two-step VAT increase to 16%. He emphasizes that tax increases are essential to address ongoing expenditure issues in health, education, transport, and security sectors.
Godongwana’s plan aims to alleviate pressure on essential services, stating that difficult choices must be made between funding public services and reducing staff. His rationale for targeting VAT over personal or corporate taxes highlights his intent to avoid negatively impacting investment and economic growth. The ANC supports this revised budget; however, the DA remains opposed, requesting temporary tax increases alongside comprehensive economic reforms.
The ongoing budget dispute has raised questions about President Cyril Ramaphosa’s ability to govern effectively, as only the smaller Patriotic Alliance has backed the budget so far. Tensions are exacerbated by contentious issues, such as proposed land reform laws, leading to further political fragmentation.
Additionally, both major opposition parties—the Economic Freedom Fighters (EFF) and Umkhonto weSizwe—have condemned the budget, voicing concerns that tax hikes disproportionately affect low-income citizens. To pass the budget, the ANC will require support from at least one of the significant opposition parties, creating a precarious situation.
Observers stress the critical role of parliament in reviewing the budget, marking a shift in how the ANC must negotiate to implement policies that were once effortlessly passed. Criticism of Godongwana’s choice to raise VAT instead of implementing a wealth tax suggests an acknowledgment of broader public impact, while calls for measurable economic strategies reflect frustrations over high unemployment rates exceeding 30%.
The 2025 South Africa budget has highlighted deep divisions within the coalition government, particularly between the ANC and the DA, creating significant obstacles for Finance Minister Enoch Godongwana. The decision to increase VAT, rather than targeting wealthier citizens for additional taxes, signals a critical response to persistent public pressures. Moving forward, the government’s ability to cooperate with opposition parties will determine whether the budget can be passed or if continued deadlock will threaten the coalition’s stability.
Original Source: www.bbc.com
