South Africa’s government of national unity faces uncertainty after a key partner in the coalition abstained from voting on the 2025 budget.
On Wednesday, lawmakers approved the fiscal framework by a narrow margin of 194 to 182, with the main point of contention being an increase in value added tax (VAT).
The Democratic Alliance (DA), along with opposition parties uMkhonto we Sizwe and the Economic Freedom Fighters, opposed the new fiscal framework.
The controversial budget plans to raise VAT by half a percentage point from next month, and another half a percentage point the following year, resulting in a total VAT rate of 16% by 2026-2027.
Opposition parties have criticized the budget for being “anti-poor” as it will increase the cost of living for goods and services including food and electricity.
The minister of finance, Enoch Godongwana, claimed that VAT is primarily paid by the three upper income categories and not the poor, using this data to justify the tax increase.
According to the new budget, more than 20 million South Africans are reliant on welfare grants and the nation’s unemployment rate sits at just over 32%.
The scheduled 0.5% raise is expected to generate $800 million in revenue annually, potentially funding government services such as healthcare, education, and social programs.
The DA’s call for increased efforts to stimulate the economy and review government expenditure was not met with any action from the treasury.
Following the vote, the DA has announced legal action to contest the budget decision.
Godongwana expressed concerns over the DA’s decision to vote against the budget while still seeking to participate in its implementation, stating that they should not benefit from the budget given their opposition.
The DA’s entry into the unity government follows the ANC’s loss of parliamentary majority last year.
Differences in ideology on issues such as foreign policy, land reform, education, and healthcare have led to ongoing disputes between the ANC and the DA.
Moments of tension have become common, including the postponement of the budget speech in February due to disagreements over VAT.
In a surprise turn of events, ActionSA, a smaller party outside the unity government, lent its support to the ANC, causing the budget to narrowly pass.
On Wednesday, lawmakers approved the fiscal framework by a narrow margin of 194 to 182, with the main point of contention being an increase in value added tax (VAT).
The Democratic Alliance (DA), along with opposition parties uMkhonto we Sizwe and the Economic Freedom Fighters, opposed the new fiscal framework.
The controversial budget plans to raise VAT by half a percentage point from next month, and another half a percentage point the following year, resulting in a total VAT rate of 16% by 2026-2027.
Opposition parties have criticized the budget for being “anti-poor” as it will increase the cost of living for goods and services including food and electricity.
The minister of finance, Enoch Godongwana, claimed that VAT is primarily paid by the three upper income categories and not the poor, using this data to justify the tax increase.
According to the new budget, more than 20 million South Africans are reliant on welfare grants and the nation’s unemployment rate sits at just over 32%.
The scheduled 0.5% raise is expected to generate $800 million in revenue annually, potentially funding government services such as healthcare, education, and social programs.
The DA’s call for increased efforts to stimulate the economy and review government expenditure was not met with any action from the treasury.
Following the vote, the DA has announced legal action to contest the budget decision.
Godongwana expressed concerns over the DA’s decision to vote against the budget while still seeking to participate in its implementation, stating that they should not benefit from the budget given their opposition.
The DA’s entry into the unity government follows the ANC’s loss of parliamentary majority last year.
Differences in ideology on issues such as foreign policy, land reform, education, and healthcare have led to ongoing disputes between the ANC and the DA.
Moments of tension have become common, including the postponement of the budget speech in February due to disagreements over VAT.
In a surprise turn of events, ActionSA, a smaller party outside the unity government, lent its support to the ANC, causing the budget to narrowly pass.
Source: http://www.africanews.com/2025/04/03/key-coalition-partner-votes-against-south-africas-budget/
