South Africa: VAT hike rocks ruling coalition

A  political battle that threatens to derail the South African economy. In the midst of a budget crisis, the government wants to raise VAT to 15.5%, a move presented as essential to plug a 13.5 billion rand hole.

But the ruling coalition is fractured. The Democratic Alliance Party, the country’s second-largest political force, is vehemently opposed to the measure. It has even taken the matter to court, with a hearing scheduled for April 22.

Objective: to block the budget vote and avoid, in its view, a fiscal shock for the middle class and the economy.

Finance Minister Enoch Godongwana remains firm: He is now trying to bind together other parties outside the coalition to pass the bill.

But the tension is worrying. Investors fear a break-up of the majority, which could pave the way for the radical left-wing Economic Freedom Fighters to come to power.Parliament will reconvene on May 6th, and this could prove to be the turning point.

source: africa news