South Africa's VAT Hike Halt: Political Pushback Prevails

The South African government has canceled a proposed VAT increase that could have threatened the stability of the unity government. Political parties, including the Democratic Alliance, opposed the hike, citing concerns over its impact on the economy and vulnerable populations. Finance Minister Enoch Godongwana announced the decision following consultations.

The South African government has backtracked on a proposed value-added tax (VAT) increase meant to boost tax revenues, following strong opposition that could have destabilized the unity government.

Finance Minister Enoch Godongwana confirmed the decision on Thursday, saying that extensive consultations with political parties led to the cancellation.

The proposed 0.5 per cent VAT increase was met with firm resistance, particularly from the Democratic Alliance, which argued it would harm vulnerable populations amid high unemployment rates and reliance on welfare.

(With inputs from agencies.)