South Africa’s 2025 budget, tabled by Finance Minister Enoch Godongwana, faces significant backlash from coalition partners, particularly the Democratic Alliance. The delay in presentation was prompted by intense opposition to increased VAT amidst a cost-of-living crisis. With the ANC backing the budget but needing support from other parties to pass it, the situation highlights acute divisions within the government and potential repercussions for its stability.
South Africa has encountered significant challenges following divisions within its coalition government regarding the national budget, which has been delayed for a month. Analysts suggest that the budget presented by Finance Minister Enoch Godongwana has received backlash, particularly from the Democratic Alliance (DA), the largest coalition partner, which has rejected the proposals twice. This coalition, formed after the African National Congress (ANC) lost its parliamentary majority in the previous elections, now faces an uphill battle to pass the budget without broad support.
In light of intense opposition to a proposed increase in value-added tax (VAT), which would exacerbate the cost-of-living crisis, Godongwana postponed the presentation of the budget. The unprecedented delay marked a historical moment since the end of apartheid in 1994. Subsequently, he presented a revised budget, branded as “bold and pragmatic,” proposing a reduced VAT increase to 16% over two stages rather than the initially intended 17%.
Godongwana emphasized the necessity of increasing taxes to address ongoing fiscal pressures in essential sectors such as health and education. He argued that the decision to increase VAT instead of personal or corporate taxes is aimed at safeguarding investment and economic growth. He posed imperative questions about the potential consequences of not addressing funding gaps, stating, “They have to make a choice – do we close schools, hospitals or clinics?”
The revised budget has the backing of the ANC, but the DA continues to resist support unless there are extensive reforms to promote economic growth and job creation. Consequently, President Cyril Ramaphosa’s ability to mediate within the coalition has come under scrutiny, particularly as only the Patriotic Alliance has endorsed the budget.
The ongoing impasse underscores growing rifts within the coalition, with both the DA and other major opposition parties denouncing the budget. Analysts, including Thokozile Madonko from Wits University, highlight the crucial role of parliament in either approving or rejecting the budget, given the ANC’s diminished ability to unilaterally enforce its policies.
Criticism extends towards Godongwana’s approach to taxation, categorized as the “laziest option,” rather than addressing wealth disparities directly. Other experts, such as Adrian Saville, describe the budget as lacking concrete initiatives to tackle the prevalent unemployment crisis exceeding 30%. Godongwana, once viewed as a stabilizing figure, now confronts significant challenges to restore his reputation amidst the ongoing political turmoil.
In summary, South Africa’s budget presentation by Finance Minister Enoch Godongwana has unveiled deep divisions within the coalition government, primarily due to opposition from the DA regarding tax increases. The revised budget attempts to address fiscal needs while alleviating pressure on citizens. However, the failure to secure broad support raises concerns for the stability of the coalition and the country’s governance. The success of Godongwana’s budget in parliament is critical for both political credibility and economic stability.
Original Source: www.bbc.com
