The South African government has canceled a proposed tax increase that has threatened to collapse the unity government after a pushback from various political parties
ByMOGOMOTSI MAGOME Associated Press
JOHANNESBURG — The South African government on Thursday canceled a proposed tax increase that had threatened to collapse the unity government after a pushback from various political parties.
Finance Minister Enoch Godongwana announced that the government would no longer implement a 0.5% increase on value-added tax (VAT), payable on goods and services including food and electricity, that would have increased it to 15.5%.
The proposed VAT increase is the latest contentious issue faced by the unity government that was formed after the African National Congress party lost its parliamentary majority for the first time since coming to power in 1994.
“The decision to forgo the increase follows extensive consultations with political parties, and careful consideration of the recommendations of the parliamentary committees,” said Godongwana in a statement early Thursday.
The government was looking to increase tax revenues through the VAT increase, and Godongwana said th