By Wendell Roelf
CAPE TOWN (Reuters) -South Africa’s contested budget passed its first test in parliament on Tuesday, but its future path remained uncertain as the two biggest political parties in the ruling coalition government were yet to agree on a strategy.
The biggest party, the African National Congress, secured the support it needed on parliament’s Standing Committee on Finance with the help of a small party outside the coalition, ActionSA.
The committee’s report expressed reservations about some of the budget’s key revenue-generating measures, raising value-added tax (VAT) and not adjusting personal income tax brackets for inflation, but it gave its overall support for the fiscal framework.
It asked the National Treasury to consider its reservations and get back to it within 30 days.
The ANC’s main coalition partner, the Democratic Alliance, accused the former liberation movement of Nelson Mandela of crossing a “line in the sand” by using a party outside the coalition to get the fiscal framework approved.
The ANC and DA have negotiated for weeks without reaching a deal to pass the budget.
The pro-business DA has sought a bigger say in economic policymaking, while the ANC has resisted and has talked to a broad swathe of parties to try to get the backing it needs.
The lower house of parliament is scheduled to vote on the fiscal framework and budget’s revenue proposals on Wednesday.
The Business Day newspaper reported that the ANC had made a “final offer” to the DA on Tuesday for a budget agreement.
The offer would limit the proposed VAT increase to a 0.5-percentage-point hike this year, rather than two 0.5-percentage-point hikes over two years. But it did not include items the DA wanted like an enhanced role for its deputy finance minister and an advisory committee on health insurance legislation that it opposes, Business Day said.
(Additional reporting by Bhargav Acharya and Sfundo Parakozov; Writing by Alexander Winning; Editing by Gareth Jones and Leslie Adler)
