South Africa’s leftist Economic Freedom Fighters (EFF) filed court papers in a bid to halt a proposed increase in fuel levies, the latest twist in a months-long tussle over the annual budget.
The higher levies was proposed last week by Finance Minister Enoch Godongwana in his third attempt to present a taxation and spending plan that can win support from lawmakers.
South Africa’s fourth-largest political party also opposed a planned value-added tax hike incorporated in previous versions of the budget, which was scrapped in the latest iteration. It sought an urgent court intervention on Thursday to halt the fuel price hikes.
The legal challenge is a potential setback in a messy process that has unsettled investors. The budget was initially scheduled for February, but the planned VAT hike led to a split among members of the country’s 10-party governing coalition and it had to be reworked.
The EFF isn’t a member of the so-called government of national unity, which was forged after the African National Congress lost its parliamentary majority in elections last year for the first time since apartheid ended in 1994.
Godongwana’s latest budget plan got a warm reception from investors and was quickly endorsed by the business-friendly Democratic Alliance, the second-largest member of the GNU, helping the rand outperform on foreign-exchange markets.
The planned levy increase of 16 cents per litre for petrol and 15 cents per litre for diesel, effective from June 4, is among measures the minister put forward to plug the revenue gap left by abandoning the VAT hike.
The EFF wrote to Godongwana, arguing that raising the fuel levy would hurt the poorest South Africans and undermine economic growth. It also said he acted unlawfully by failing to introduce a new tax through a money bill.
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