South Africa’s Budget Crisis: UNC Government Faces Major Challenges and Protests

The budget crisis in South Africa has revealed a deep divide between the ANC and DA regarding fiscal policy, with the ANC proposing a VAT increase that may harm the working class. Protesters have voiced opposition, and key trade unions and political figures are advocating for strategies that support rather than penalize low-income citizens. The inability to present a unified budget signifies a critical political impasse that threatens essential services for many.

On March 1, 2025, it was reported that South Africa’s largest political parties, the African National Congress (ANC) and the Democratic Alliance (DA), are locked in disagreement over how to address a challenging budget crisis. The ANC plans to increase Value Added Tax (VAT) from 15% to 17%, disproportionately burdening the poor to sustain social programs, while the DA favors significant reductions in public spending.

The newly formed Government of National Unity (GNU) was unable to present its inaugural budget, a first in post-Apartheid history, leading to tensions between the two dominant parties. Protesters gathered in Cape Town, opposing both the proposed VAT increase and potential budget cuts that threaten essential programs for the working class.

Irvin Jim, General Secretary of NUMSA, expressed concerns that the VAT hike would exacerbate financial strain on low-income households, who already allocate a significant portion of their income towards food and basic utilities. Furthermore, the proposed tariff increase on electricity adds to the looming financial challenges facing citizens.

The Congress of South African Trade Unions (COSATU) also condemned the VAT increase, asserting it reflects a government priority misaligned with the needs of workers. The South African Communist Party (SACP), another ANC ally, criticized the lack of consultation surrounding the budget policies and highlighted the negative impact on South Africans’ livelihoods.

The ANC, however, seeks collaboration with the DA to ensure the VAT hike passes through parliament, despite their previous criticism of the DA’s economic policies, which have been perceived as detrimental to the working class. The government’s failure to achieve a budget agreement signals a significant political impasse, forcing further scrutiny from various stakeholders within the country.

Due to the budget controversy, opposition leader Julius Malema vocalized concerns regarding the state of governance in South Africa, calling the executive’s inability to present the budget an indicator of systemic failure. Meanwhile, the DA’s staunch opposition to the VAT increase was framed as a commitment to addressing South Africa’s fiscal realities, despite criticism of its broader economic approach.

As protests continued, trade union advocates called for increased taxation on wealth and stricter enforcement to curb tax evasion, rather than punishing the working class through VAT hikes. These advocates argue that alternatives exist that would alleviate fiscal pressure without compromising essential services or unfairly targeting vulnerable populations.

In conclusion, the debate surrounding South Africa’s budget highlights profound ideological rifts between the ANC and DA amidst a persistent socio-economic crisis. The failure to present the budget reflects not only political divisions but also raises questions regarding the implications for ordinary citizens reliant on governmental support and services. The necessity for a collaborative approach that addresses the needs of lower-income families without imposing regressive taxes appears increasingly urgent.

The budget crisis in South Africa has exposed significant tensions within the Government of National Unity, revealing conflicting ideologies between the ANC and the DA on fiscal policy. As public anger mounts over proposed tax hikes and budget cuts, the need for equitable solutions that prioritize the welfare of the working class becomes critical. The ongoing situation necessitates a serious reevaluation of economic strategies to ensure that vulnerable populations are not further marginalized.

Original Source: indepthnews.net