South Africa Delays First National Budget Amid Internal Tensions over Tax Hikes
South Africa’s coalition government made a stunning move on Wednesday, indefinitely postponing its first national budget speech in parliament due to internal disagreements over proposed tax hikes.
Finance Minister Enoch Godongwana was scheduled to present the government’s fiscal priorities, including plans to raise revenue, but Speaker Thoko Didiza announced a shock adjournment, stating, “We have decided to adjourn proceedings for a date to be determined.”
The decision came after parties in the executive failed to reach a consensus on the proposed budget measures.
Since the end of apartheid in 1994, the African National Congress (ANC) had ruled South Africa alone, but after losing its majority in last year’s elections, it was forced into a coalition with nine other parties. Among them is the Democratic Alliance (DA), a longtime critic of the ANC.
John Steenhuisen, DA leader, celebrated the delay, calling it “a victory for the people of South Africa.” The DA had opposed a proposal to raise the value-added tax (VAT) from 15% to 17%, arguing that it would have severely damaged the country’s struggling economy.
However, the postponement was met with criticism from the radical-left Economic Freedom Fighters (EFF), who accused the government of collapse. “There is no government, it has collapsed,” EFF leader Julius Malema declared in parliament.
South Africa is grappling with multiple economic challenges, including the loss of US aid following a controversial land reform law that President Donald Trump criticized for allowing the government to seize land from white farmers.
The nation’s inflation rate has crept up to 3% as of December, and with over 60% of its 63 million people living in poverty, South Africa continues to struggle with some of the highest levels of inequality in the world.
Unemployment saw a slight decrease in the last quarter of 2024, falling to 32%, though the figure remains among the highest globally, further intensifying the country’s economic challenges. As South Africa faces mounting pressures, the delay of the budget speech adds another layer of uncertainty to its already fragile political and economic landscape.
