Finance Minister Enoch Godongwana has postponed South Africa’s national budget due to internal disagreements over a proposed VAT increase. This unprecedented move has caused shockwaves in the market, resulting in a dip in the currency. Key opposition, particularly from the DA, stresses the economic consequences of the tax hike, while the budget is now rescheduled for March 12 after further discussions.
South Africa’s Finance Minister Enoch Godongwana has postponed the national budget announcement due to significant disagreements among coalition partners. His proposal to increase value-added tax (VAT) from 15% to 17% faced strong opposition, as it would elevate living costs for citizens already grappling with a cost-of-living crisis. This budget delay is unprecedented in the post-apartheid era, triggering a negative response in financial markets and a decline in the local currency against the US dollar.
The Democratic Alliance (DA), the second-largest party in the coalition, vocally opposed the VAT hike, with leader John Stenhuisen stating that agreeing to the increase would severely harm South Africa’s economy. The last VAT hike occurred in 2018. Other coalition members like Freedom Front Plus criticized the sudden announcement, claiming they were informed about the tax raise only shortly before the budget was to be introduced.
Godongwana clarified that the VAT increase was discussed during a cabinet meeting the previous week. He plans to reschedule the budget announcement for March 12 to allow further negotiations with coalition partners to resolve the internal discord. The opposition party, Economic Freedom Fighters (EFF), expressed frustration over the delay, calling it a reflection of ineffective governance.
Conversely, the DA viewed the postponement as a victory, advocating for a budget that facilitates economic growth and job creation. The situation indicates the challenges facing the ruling coalition and the complexities of governance in the current political climate in South Africa.
Finance Minister Enoch Godongwana’s postponement of the South African national budget due to coalition disagreements highlights the internal conflicts impacting governance. The proposed VAT increase sparked significant opposition, particularly from the DA, reflecting the challenges faced by the ANC-led coalition. As discussions continue, the budget will now be tabled in March, representing a crucial moment for the country’s economic strategy.
Original Source: www.bbc.com
