The South African budget passes the first test, but it’s still unclear what comes next

The disputed budget in South Africa survived its first test in parliament on Tuesday, but the two largest political parties in the ruling coalition government still couldn’t agree on a plan, so it was unclear where it would go from here.

ActionSA, a small party outside the alliance, helped the largest party, the African National Congress, gain the necessary support on parliament’s Standing Committee on Finance.

The committee’s report supported the fiscal framework generally, but it voiced concerns about some of the budget’s main revenue-generating measures, such as increasing value-added tax (VAT) and failing to adjust personal income tax bands for inflation.

It requested that the National Treasury take its concerns into account and respond to it within 30 days.

The Democratic Alliance, the ANC’s primary coalition partner, charged that the former Nelson Mandela liberation movement had crossed a “line in the sand” by utilizing a non-coalition party to secure approval for the fiscal framework.

After weeks of negotiations, the ANC and DA have failed to come to an agreement on passing the budget.

The ANC has resisted and has spoken to a wide range of parties in an attempt to gain the support it requires, while the pro-business DA has pushed for a greater voice in economic policymaking.

On Wednesday, the budget’s revenue proposals and the fiscal framework will be put to a vote in the lower chamber of parliament.

The ANC presented a “final offer” to the DA on Tuesday for a budget agreement, according to the Business Day newspaper.

Instead of two 0.5 percentage point increases over two years, the solution would restrict the proposed VAT rise to a 0.5 percentage point increase this year.

However, according to Business Day, it omitted things the DA requested, such as an advisory council on health insurance legislation that it opposes and an expanded position for its deputy finance minister.