South Africa’s National Treasury is examining alternatives to a proposed value-added tax (VAT) increase, President Cyril Ramaphosa said Sunday.
Facing mounting political resistance, Ramaphosa acknowledged the chances of avoiding the hike are slim, despite ongoing efforts to find other revenue options.
Speaking on X, the president noted Treasury’s review of various revenue sources yielded few viable substitutes for the controversial VAT increase.
The budget proposal, unveiled last week, suggests a one percentage point VAT hike phased in over two years to ease fiscal pressures.
The Democratic Alliance (DA), the second-largest party in the ruling coalition, rejected the plan, warning it would disproportionately harm the poorest citizens.
“The process will continue for 30 days,” Ramaphosa stated, adding that a final report will determine the government’s next steps.
Tensions escalated as the DA filed a legal challenge Thursday, questioning the budget’s constitutionality and aiming to block the VAT hike.
The move deepens a growing rift in the fragile coalition formed after the African National Congress (ANC) lost its majority last year.
Market watchers fear the DA could withdraw from the alliance, a scenario that would destabilize the first multi-party government since apartheid ended in 1994.
