Da Rebellion Over Tax Hike Puts Gnu On Life Support

South Africa's coalition government is teetering on the edge of a fiscal fallout, with Finance Minister Enoch Godongwana standing firm on a controversial VAT increase that has sent political tensions soaring and the rand wobbling.

At the centre of the storm is the proposed 0.5 rise in value-added tax , taking the rate from 15 to 15.5, which the minister insists is essential to plug a R13.5 billion hole in the national budget. But the Democratic Alliance DA, the African National Congress' ANC main coalition partner in the Government of National Unity GNU, is having none of it.

The DA has launched a legal battle to block the VAT increase, calling it a reckless burden on already strained South African households. The party is heading to court on 22 April in a bid to halt the hike before it kicks in on 1 May, as reported by Business Tech . The fallout from the dispute has cast doubt over the future of the GNU, raising fears in the financial world of increased instability and even the possibility of radical parties like the Economic Freedom Fighters EFF swooping into the vacuum.

'If there was another option, I'd have taken it,' Godongwana told broadcaster eNCA, adding that the fiscal plan he tabled was the only feasible path forward. The DA, however, refused to support the initial legislation in Parliament and now wants the VAT increase scrapped altogether.

The ANC, determined to push ahead, has turned to smaller opposition parties to salvage the budget . But even these new allies are demanding that the tax hike be removed. Insiders say the Treasury has explored all angles, but no viable alternative revenue source has emerged to fill the R13.5 billion gap.