The South African Finance Minister, Enoch Godongwana, has postponed the unveiling of the national budget due to intense disagreements within the coalition government. The contentious issue at the heart of this postponement is a proposed increase in the value-added tax (VAT) from 15% to 17%, a move that has sparked sharp criticism. The Democratic Alliance (DA), the second-largest party in the coalition, vehemently opposes the tax hike, expressing concerns about its potential impact on the economy.
The budget, originally scheduled for presentation on an unspecified date, will now be tabled on March 12. This delay allows for further discussions among coalition members to address their differences. The African National Congress (ANC), which lost its parliamentary majority in elections last year, has been compelled to form a coalition government. John Stenhuisen, leader of the ANC, stated that his party could not, in "good conscience," support a VAT increase.
The VAT increase proposal was introduced in the cabinet last week, creating ripples of discontent. The opposition Economic Freedom Fighters (EFF) criticized the postponement, describing it as a "symptom of weak, indecisive, and opportunistic governance." The news of the delay adversely affected the currency, which plummeted against the US dollar as markets reacted with apprehension.
The ANC's other coalition partners, such as the Freedom Front Plus, expressed surprise, stating they were informed of the proposed VAT hike only shortly before Minister Godongwana was due to present the budget. This incident marks the first time since the end of apartheid in 1994 that a budget has not been tabled on time.
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