South Africa Proposes Smaller VAT Increase Amid Budget Disputes

South Africa's Finance Minister Enoch Godongwana has proposed a gradual increase in the value-added tax (VAT) rate, starting with a 0.5 percentage point rise this year and another 0.5 next year, ultimately bringing the rate to 16% by 2026. This proposal comes after a previously considered 2 percentage-point increase was rejected, creating significant political tension within the coalition government. Opposition leaders, including Julius Malema of the Economic Freedom Fighters, have strongly criticized the VAT hike, arguing it disproportionately affects the poor and advocating for increased taxes on the wealthy instead. The Democratic Alliance has indicated it will only support the budget if accompanied by spending cuts and strategies for economic growth. The proposal is seen as a compromise to stabilize the fractious coalition government, which has struggled to unify on budgetary policies since the last elections. The revised budget is expected to be debated and voted on in May.