South Africa's treasury looking at alternatives to VAT hike

The second biggest party in the ruling coalition, the pro-business Democratic Alliance (DA), on Wednesday rejected a proposal in the budget to raise VAT by 1 percentage point spread over two years, arguing it would hit the poorest hard.

"We will look at all ways and means of seeing whether that is possible or not," Ramaphosa said on X. "From current examination, Treasury has said — having looked at various areas where they can look, it doesn't seem to be so.

"That process will be engaged in for the next 30 days, and it's only thereafter that the report will be available and will be presented, that we will be able to take the matter forward."

The DA filed a court case on Thursday challenging the legality of the budget process and sought to block the implementation of a VAT increase, widening a rift in the fragile coalition.

Market fears have grown that the DA may quit the multi-party government, which was formed last year after the ANC lost its parliamentary majority for the first time since the end of apartheid in 1994.