South Africa Scraps Controversial Tax Hike Following Pressure

South Africa has dropped its controversial proposal to increase value-added tax (VAT) by 1% over two years, following pushback from various political parties and civil society groups. The planned VAT hike, intended to address a $4.02 billion budget deficit, would have directly impacted households already struggling with rising costs. The National Treasury, which had initially aimed to boost funding for essential services like healthcare and education, warned that the budget gap would now require tough spending cuts, potentially affecting cash transfers to low-income households. While the VAT increase has been shelved, the government will need to find alternative revenue sources to maintain crucial services, amid growing concerns over unemployment and inequality.

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