South Africa’s unity government risks collapse as parties clash over national budget

JOHANNESBURG (AP) — South Africa 's fragile unity government was shaken again Wednesday as the country's second-largest political party broke with partners and voted against a national budget.

The Democratic Alliance, which joined the government after the long-ruling African National Congress lost its parliamentary majority last year, said it could not support a tax increase that would further burden the poor majority of the country's population.

It said it would challenge the budget's adoption in court.

The leftist rival party Economic Freedom Fighters celebrated the friction. “We are happy that we managed to break this so-called GNU (government of national unity). What is uniting you if you can’t agree on something a national budget?” EFF leader Julius Malema said.

Finance Minister Enoch Godongwana raised doubts about the DA’s ability to remain in the government.

“I don’t think you can vote against a budget, and tomorrow you want to grow and be part of its implementation. It can’t be,” Godongwana said.

The disputed budget would raise the Value Added Tax by half a percentage point starting next month, with another half a percentage point introduced next year.

VAT is payable on goods and services including food and electricity. Opposition parties and civil society have criticized the proposed budget as anti-poor.

According to the latest budget, more than 20 million people in South Africa rely on welfare grants, with the unemployment rate at over 32%.

The tax increase is meant to generate over 15 billion rand (about $800 million) in revenue annually to fund health, education and social services programs.

Already, the budget had been revised to address foreign aid cuts by the new U.S. administration.

This is the latest disagreement between the two main parties after the ANC lost its 30-year parliamentary majority in its worst-ever electoral performance last year.

The ANC and DA have ideological differences on issues including foreign policy, land reform, education and health sector reforms.

On Wednesday, a small party outside the unity government, ActionSA, unexpectedly tipped the scales in favor of the ANC to pass the budget.