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South Africa scraps VAT increase in dramatic U-turn after coalition rift

Finance minister forced into climbdown on tax rise after bitter fight with governing partner

Finance minister Enoch Godongwana will table a new budget in the next few weeks © Esa Alexander/Reuters

Finance minister Enoch Godongwana will table a new budget in the next few weeks © Esa Alexander/Reuters

South Africa’s finance minister has scrapped a controversial VAT increase in a big concession to his party’s main governing partner, after a fierce battle threatened to bring down the country’s grand coalition.

In a late-night announcement, finance minister Enoch Godongwana said the proposal to lift VAT from 15.5 per cent to 16 per cent over two years had been dropped after “extensive consultation with political parties”, leaving a R75bn ($4bn) hole in South Africa’s budget over the next three years.

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Author: Rob Rose in Johannesburg

Source: Financial Times

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