South Africa’s Finance Minister Faces Budget Rollout Delay Due to Tax Controversy
Enoch Godongwana, the Finance Minister of South Africa, has encountered a significant setback in his efforts to present the national budget due to disagreements within the coalition government. These disputes centered around Godongwana’s proposal to increase value-added-tax (VAT), which would have led to higher prices for goods at a time when South Africans are already grappling with a severe cost-of-living crisis.
Godongwana is affiliated with the African National Congress (ANC), which had formed a coalition government after losing its parliamentary majority in elections last year. The failure of Godongwana to unveil the budget has sent shockwaves through South Africa, marking the first such occurrence since the end of apartheid rule in 1994.
The currency suffered a decline against the US dollar following this news, as markets reacted negatively to the announcement. One of the coalition’s major partners, the Democratic Alliance (DA), was particularly vocal in opposing Godongwanas proposal for increasing VAT from 15% to 17%, citing concerns that it would exacerbate economic difficulties.
The last adjustment to VAT occurred in 2018 when it increased from 14% to 15%. Other ANC coalition partners, such as the Freedom Front Plus, expressed dissatisfaction because they were only made aware of this proposal after Godongwana was scheduled to present the budget. Godongwana stated that the plan had been discussed in cabinet meetings last week.
As a result of these disagreements, Godongwana announced that the national budget will now be presented on March 12th following further discussions aimed at resolving these differences.
The opposition Economic Freedom Fighters (EFF) expressed disappointment with this postponement, viewing it as an indication of weak and indecisive governance. In contrast, the DA welcomed the delay, considering it a victory and declaring its intention to push for a budget that would better support economic growth and employment.
