SA president's coalition partner mounts court challenge against budget

South Africa's pro-business Democratic Alliance party filed a court case challenging the legality of the budget process on Thursday and sought to block the implementation of a value-added tax increase, widening a rift in the fragile ruling coalition.

South Africa's National Assembly narrowly passed the budget's fiscal framework and revenue proposals on Wednesday, with the biggest party in the coalition government, the African National Congress, securing support from smaller partners and parties outside the coalition.

The DA, which is the second biggest party in the coalition, voted against the legislation, saying the adoption by a parliamentary committee of a report supporting the fiscal framework was procedurally flawed.

It also opposed a proposal in the budget to raise VAT by 1 percentage point spread over two years, arguing it would hit the poorest hard.

Quit government

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.

The DA is expected to make a decision on its continued participation in government in the coming days.

Helen Zille, chairperson of the DA's federal council, said the party was seeking an interdict to stop South Africa's tax service from implementing the 0.5% increase to VAT on May 1.

"This interdict request is based on our legal challenge to suspend the finance minister's announcement of the VAT hike and overturning Parliament's adoption of the Fiscal Framework," she said.