Ramaphosa’s VAT hike warning

South African President Cyril Ramaphosa said the National Treasury is looking at all options to avoid having to raise value-added tax but that the prospects for escaping such an increase are dim. 

The Democratic Alliance, the second-biggest party in the country that’s in a 10-member coalition with Ramaphosa’s African National Congress, refused to support a key budget law Wednesday that paves the way for higher VAT come May 1.

The ANC was able to pass the proposal after it received backing from parties outside of the government of national unity. The law includes a non-binding recommendation that the Treasury consider alternative ways to raise revenue. 

“We will look at all ways and means of seeing whether that is possible or not,” Ramaphosa said in a post on X Sunday. “From the current examination, Treasury has said — having looked at various areas where they can look, it doesn’t seem to be so.” 

Ramaphosa said proposals to find other revenue options from parties, including ActionSA, are “being taken very seriously.”

“That process will be engaged in for the next 30 days, and it’s only thereafter that the report will be available and will be presented that we will be able to take the matter forward,” he said. 

The disagreement over the budget has raised the risk that the GNU could unravel. The DA will await the outcome of a legal challenge seeking to block the VAT increase before deciding whether to remain in the coalition.

The ANC’s national working committee will discuss GNU at a meeting Monday, after which its national executive council will take up the matter, Ramaphosa said in a separate post.