South Africa's Treasury Seeks Alternatives to VAT Hike

South Africa's National Treasury explores options to avoid a VAT increase, but odds remain slim, as per President Cyril Ramaphosa. The Democratic Alliance opposes the increase, arguing it impacts the poor. They have legally challenged the budget process, risking coalition stability.

South Africa's National Treasury is under pressure to identify alternative revenue-raising methods as President Cyril Ramaphosa revealed the difficulty in avoiding a proposed value-added tax increase. Despite this, the ruling coalition's second-largest party, the Democratic Alliance (DA), rejects the VAT hike due to concerns it disproportionately affects the poor.

In a message on X, President Ramaphosa stated, "We will explore all feasible measures to determine if we can avert this increase," signaling that preliminary assessments by the Treasury found limited options. The initiative will undergo a 30-day scrutiny before any decision is made.

The DA escalated the matter by filing a court case challenging the budget process's legality and aiming to block the VAT increase. This legal action threatens to deepen the coalition divide, raising concerns over the DA's potential departure from the government formed post-ANC's loss of majority since apartheid ended in 1994.

(With inputs from agencies.)