South African budget rejected for first time since 1994

Divisions in the South African coalition government have thrown new budget plans into doubt after months of delay.

BBC News reported on March 12th that analysts believe it unlikely that the government will pass this version of the budget without major amendments.

The African National Congress (ANC) was forced to form a government of national unity with nine other parties after losing its majority in last year’s elections.

The size of this coalition means that passing legislation has proved tricky.

This budget is a prime example of this and without the support of the ANC’s largest coalition partner the Democratic Alliance, they will fail to pass it.

Finance Minister Enoch Godongwana was forced to postpone his budget announcement earlier this year after facing severe backlash for his plan to raise VAT at a time when South Africans are feeling the effects of a cost-of-living crisis.

The budget delay was the first in South African history since the end of white-minority rule in 1994.

Godongwana has tried to appease his coalition partners by revising his previous plans and reducing the increase in VAT from the initial 17% now to 16%, raised gradually over two years.

He defended his decision to raise VAT rather than personal or corporate taxes, claiming that a raise in VAT would generate more revenue for the country.

When pressed on his choices, he was insistent that tough decisions must be made and challenged his coalition partners to offer a viable alternative telling reporters: “They have to make a choice – do we close schools, hospitals or clinics? They have to make that choice. Do we fire people? That is the choice we have to make and that is not a good choice to make.”

The new budget has the backing of the ANC but has failed to garner support from the Democratic Alliance.

Without their support, the ANC will not be able to pass a new budget and South Africa will continue to be stuck in its current predicament.

BBC News