South Africa’s National Treasury is exploring alternatives to a proposed value-added tax (VAT) increase, President Cyril Ramaphosa stated on Sunday.
However, he indicated that avoiding the hike appears unlikely based on current assessments.
This comes after the Democratic Alliance (DA), a key partner in the ruling coalition, rejected the planned VAT increase, citing concerns about its impact on the poorest citizens.
Ramaphosa acknowledged the DA’s objections, stating on X that the treasury will examine all possible revenue-raising methods over the next month.
The DA has escalated the dispute by filing a court case challenging the legality of the budget process and seeking to block the VAT implementation.
This legal action has widened existing fissures within the coalition government, formed after the African National Congress (ANC) lost its parliamentary majority.
Growing market apprehension surrounds the possibility of the DA withdrawing from the multi-party government.
Such a move could destabilize the fragile coalition formed last year.
The treasury’s upcoming report in 30 days will be crucial in determining the future of the proposed tax changes and the stability of South Africa’s political landscape.