Budget 2.0: Political Parties Divided Over Vat Hike, Albeit Lower Than Initial Proposal

Political parties in parliament were divided over the budget speech delivered by Finance Minister Enoch Godongwana on Wednesday, with the Democratic Alliance DA adamant it would not support a proposed one percentage point VAT increase staggered over two years.

Godongwana compromised on his initial plans for a two percentage point hike in VAT after an outcry on 19 February from coalition government partners who said it was too high.

The DA, unions and other opposition parties including the Economic Freedom Fighters EFF, as well as labour federation Cosatu have been adamant that they will not accept any VAT increase.

Speaking after Godongwanas speech, DA leader John Steenhuisen said the party would not support the budget because it would hit the pockets of South Africans.

The ANC has once again insisted on a budget with not one, but two VAT increases, which cumulatively will increase VAT by 1 over the next two years. This act by the ANC will make the people of South Africa poorer. Food prices will rise, and the future of the government is at risk, he said.