South Africa’s Parliament Approves 2025 Budget Amid VAT Controversy

South Africa’s parliament passed the 2025 Budget, proposed by Finance Minister Enoch Godongwana, despite strong opposition to a VAT increase. The budget was approved by a narrow margin of 194 to 182 votes, with no abstentions. The vote followed weeks of political negotiation, where the ruling ANC allied with smaller parties to secure the budget’s passage.

On April 2, 2025, the South African parliament, led by House Chairperson Cedric Frolick, successfully passed the 2025 Budget proposed by Finance Minister Enoch Godongwana. This action was taken despite significant opposition regarding a proposed increase in value-added tax (VAT). The budget was backed narrowly, with 194 lawmakers voting in favor and 182 against, while no member abstained from the vote.

The budget’s original presentation was scheduled for February but faced delays due to internal disagreements over the VAT increase. Ultimately, on March 12, Godongwana provided a revised budget proposal, advocating for a phased VAT hike to combat governmental funding shortfalls. The plan includes a 0.5 percentage point increase in VAT for the 2025/26 fiscal year, followed by another increment of the same magnitude the subsequent year, resulting in a total rate of 16 percent by 2026/27.

In his address, Minister Godongwana emphasized the necessity of the tax increase to maintain essential public services amid mounting fiscal pressures, particularly in the health, education, transport, and security sectors. However, this proposal garnered significant political backlash, with the Democratic Alliance (DA), the second-largest party in the ruling coalition, staunchly opposing the budget due to its concerns regarding tax increases and government spending priorities. Previously, the DA had indicated conditional support contingent upon the government retracting the Expropriation Act.

After prolonged discussions and intense political debate, the ruling African National Congress garnered sufficient support from smaller coalition partners and various political factions, enabling the budget’s passage despite the hybrid opposition.

In conclusion, the South African parliament’s approval of the 2025 Budget, which includes a controversial VAT increase, marks a significant moment amid political dissent. The marginal approval showcases the ongoing challenges faced by the Finance Minister in securing legislative support while addressing the imperative for sustainable public funding. The outcome highlights the intricate dynamics of coalition politics and the balancing act required to consider both fiscal necessities and opposition concerns.

Original Source: english.news.cn