ANC plans new VAT hike

South Africa’s biggest political party plans a 0.75 percentage-point increase in value-added tax in a revised national budget this month, warning it will approach groups outside the ruling coalition if those in it don’t back the move, the Sunday Times reported. 

Parties, including the Democratic Alliance, objected to Finance Minister Enoch Godongwana of the African National Congress’s proposal to raise the rate to 17% from 15%.

As a result, he did not present the budget to lawmakers as scheduled last month, a first for the nation. That is now set for March 12.

The ANC and DA are in a 10-party governing coalition that President Cyril Ramaphosa set up after last year’s elections failed to produce an outright winner.

That grouping doesn’t include the Economic Freedom Fighters, which the newspaper said the ANC would approach for support, citing Maropene Ramokgopa, the ANC’s second deputy secretary general and the country’s monitoring and evaluation minister. 

The ANC didn’t immediately respond to a request for comment. The National Treasury is in a closed period until after the presentation of the budget.

The EFF opposed a VAT increase but has said it would join the so-called government of national unity if the DA left.

The DA, the second-biggest party in the unity government, is opposed to any increase in VAT and has instead proposed a range of spending cuts.

At a Feb. 24 meeting of the cabinet of ministers, Ramaphosa backed a plan to raise VAT by a range of 50 to 100 basis points, the Sunday Times said.

That gathering assigned Deputy President Paul Mashatile to set up a team to assess options, and it will report back to the cabinet on March 3, it said.