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| South Africa reverses VAT increase that threatened ANC-DA coalition | |
| (about 1 hour later) | |
| The party of South Africa's President Cyril Ramaphosa has reversed a controversial proposed value-added-tax (VAT) rise that had threatened the country's coalition government. | The party of South Africa's President Cyril Ramaphosa has reversed a controversial proposed value-added-tax (VAT) rise that had threatened the country's coalition government. |
| The hike was proposed by the African National Congress (ANC) but was strongly opposed by the Democratic Alliance (DA), its main coalition partner in the unity government, which had even asked the courts to block it. Other opposition parties also opposed it. | The hike was proposed by the African National Congress (ANC) but was strongly opposed by the Democratic Alliance (DA), its main coalition partner in the unity government, which had even asked the courts to block it. Other opposition parties also opposed it. |
| The reversal of the proposed 0.5% tax hike comes just days before it was due to take effect. | The reversal of the proposed 0.5% tax hike comes just days before it was due to take effect. |
| The finance ministry said the decision came after consultations with political parties and parliament, but warned that it would cause a significant deficit in revenue. | The finance ministry said the decision came after consultations with political parties and parliament, but warned that it would cause a significant deficit in revenue. |
| It said other tax increases or public spending cuts could follow as a result of the 75bn rand ($4bn; £3bn) shortfall. | It said other tax increases or public spending cuts could follow as a result of the 75bn rand ($4bn; £3bn) shortfall. |
| The reversal of the tax rise is likely to be welcome news for many South Africans, most of whom are already burdened by a stagnant economy and the rising cost of living. | The reversal of the tax rise is likely to be welcome news for many South Africans, most of whom are already burdened by a stagnant economy and the rising cost of living. |
| Finance Minister Enoch Godongwana had been advocating the increase, arguing it would help cushion the most vulnerable from the effects of other tax measures. | Finance Minister Enoch Godongwana had been advocating the increase, arguing it would help cushion the most vulnerable from the effects of other tax measures. |
| But it faced resistance from various political parties – including senior figures within his own ANC party – who viewed it as short-sighted. | But it faced resistance from various political parties – including senior figures within his own ANC party – who viewed it as short-sighted. |
| South Africa in 'uncharted waters' as budget splits coalition government | South Africa in 'uncharted waters' as budget splits coalition government |
| Is South Africa's coalition government about to fall apart? | Is South Africa's coalition government about to fall apart? |
| On Thursday the finance minister said "the decision not to increase VAT means that the measures to cushion lower income households against the potential negative impact of the rate increase now need to be withdrawn and other expenditure decisions revisited". | On Thursday the finance minister said "the decision not to increase VAT means that the measures to cushion lower income households against the potential negative impact of the rate increase now need to be withdrawn and other expenditure decisions revisited". |
| The minister is now expected to introduce a revised version a spending bill within the next few weeks. | The minister is now expected to introduce a revised version a spending bill within the next few weeks. |
| In February, Godongwana had to postpone his budget presentation after fierce resistance to the proposal to increase VAT. | In February, Godongwana had to postpone his budget presentation after fierce resistance to the proposal to increase VAT. |
| The DA argued the move would worsen the cost-of-living crisis and increase economic inequality. | The DA argued the move would worsen the cost-of-living crisis and increase economic inequality. |
| The DA has welcomed the reversal of the proposed increase, which it says is the result of its court challenge, but it added that the fight was not yet over. | |
| At a media briefing, the party's federal council chairperson Hellen Zille said that this was the "clearest indication yet of what it means to give a party like the DA the balance of power in parliament — so we can stop what's fundamentally detrimental to the people of South Africa". | |
| She said the party would continue to fight to "seek economic growth, job creation and responsible public spending so that the government does not keep on raising your taxes". | |
| The row comes at a challenging time for the government. | The row comes at a challenging time for the government. |
| Around a quarter of South Africans are unemployed and reliant on government support, and the treasury has warned of mounting pressure on public finances. | Around a quarter of South Africans are unemployed and reliant on government support, and the treasury has warned of mounting pressure on public finances. |
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| Ghosts of apartheid haunt South Africa as compensation anger brews | Ghosts of apartheid haunt South Africa as compensation anger brews |
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| Racially charged row between Musk and South Africa over Starlink | Racially charged row between Musk and South Africa over Starlink |
| Go to BBCAfrica.com for more news from the African continent. | Go to BBCAfrica.com for more news from the African continent. |
| Follow us on Twitter @BBCAfrica, on Facebook at BBC Africa or on Instagram at bbcafrica | Follow us on Twitter @BBCAfrica, on Facebook at BBC Africa or on Instagram at bbcafrica |