SA’s Coalition Partner -DA- Firm on Budget to Reduce VAT

(3 Minutes Read)

Budget is unprecedentedly delayed after the DA and other members of the 10-party coalition opposed a two-percentage-point increase in value-added-tax (VAT) to 17% that would have raised R191 billion over the next three fiscal years.

The Democratic Alliance (DA), the second-biggest party in South Africa’s ruling coalition, said it would only support the national budget if it met certain criteria, including placing more emphasis on economic growth.

The budget was to be tabled by Finance Minister Enoch Godongwana on February 19. It was unprecedentedly delayed after the DA and other members of the 10-party coalition opposed a two-percentage-point increase in value added-tax (Vat) to 17% that would have raised R191 billion over the next three fiscal years.

The DA will only support the re-worked budget to be presented on Wednesday if it puts more emphasis on igniting the economy, as the previous version had “clearly given up on growth,” the party’s leader John Steenhuisen said in an interview with Bloomberg on Saturday.

The coalition government formed by the African National Congress after it lost its outright majority in elections last year has prioritised accelerating economic growth, which has averaged less than 1% annually for more than a decade.

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The DA also wants the Treasury to commit to the concession of the Cape Town port, deadlines for structural reforms that are underway, a spending review, and an audit of “ghost employees. The party believes that these actions could generate R60 billion in the current budget cycle.