South Africa faces a major problem with its budget plan. The finance minister wants to raise the value-added tax by half a percent, but the second-largest party in government disagrees. They even filed a lawsuit to stop this tax increase, which should start on May 1. The finance minister says he has no other options to make the budget work.
The Democratic Alliance voted against the budget law earlier this month, forcing the African National Congress to seek help from parties outside its coalition to pass the first budget bill through parliament. Investors worry about what might happen if the coalition falls apart. They fear a more left-wing party could join the government instead.
Weekend talks between the two main parties did not solve anything. The Democratic Alliance still plans to go to court next Tuesday. They have not decided whether to leave the government partnership yet. They are waiting for the court decision first. Without the tax increase, the budget would be short by about 716 million.
The treasury department has not found any other way to raise this money. The situation remains tense as both sides stand firm on their positions.
The Democratic Alliance voted against the budget law earlier this month, forcing the African National Congress to seek help from parties outside its coalition to pass the first budget bill through parliament. Investors worry about what might happen if the coalition falls apart. They fear a more left-wing party could join the government instead.
Weekend talks between the two main parties did not solve anything. The Democratic Alliance still plans to go to court next Tuesday. They have not decided whether to leave the government partnership yet. They are waiting for the court decision first. Without the tax increase, the budget would be short by about 716 million.
The treasury department has not found any other way to raise this money. The situation remains tense as both sides stand firm on their positions.
