Proposed VAT hike the sticking point in budget negotiations

JOHANNESBURG - The African National Congress (ANC) said that the sticking point around budget negotiations remains the proposed increase to value-added tax (VAT).

In March, the finance minister tabled a budget before Parliament that included a one percentage point increase to VAT over the next two financial years.

The Democratic Alliance (DA), which is the ANC's largest Government of National Unity (GNU) partner, has stated publicly that it won’t support a VAT increase without some economic reforms.

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ActionSA, which has also been speaking with the ANC, is also refusing to budge on its rejection of the VAT hike.

At a media briefing on Tuesday, ANC Secretary-General Fikile Mbalula said the party would continue to speak to all parties represented in Parliament.

"We recognise the fact that the conditions under which we operate in are not the same as before. We are now operating under the conditions of power sharing, in what we characterise as the Government of National Unity, and there have been issues among GNU parties around the issue of VAT and as well as those who are outside and we need the budget to be passed in order for us to proceed to govern."