South Africa’s National Treasury on Wednesday proposed a smaller hike in value-added tax in a revised budget aimed at smoothing divisions in the ruling coalition, but uncertainty remained over whether it would get the support in parliament to pass.
Last month the Treasury had proposed a 2-percentage-point hike in VAT in its initial budget, but the African National Congress’ coalition partners refused to back the move, creating an impasse that was a first for South Africa since the end of apartheid.
On Wednesday the Treasury instead proposed raising VAT by 0.5 percentage points from its current level of 15% on May 1 this year, followed by another 0.5-percentage-point increase in 2026.
Minutes before the finance minister took the podium the leader of the Democratic Alliance, the second-biggest party in government, said his party was still opposed.
“The DA will not support the budget in its current form,” said John Steenhuisen on X.
President Cyril Ramaphosa’s spokesperson had said earlier on Wednesday that he was “reasonably comfortable” that any remaining issues could be solved so the budget could be passed.
