South Africa’s Finance Minister Enoch Godongwana has dropped plans to increase value-added tax (VAT), in a major climb-down to prevent the collapse of the coalition government.

Godongwana’s decision came after the second-biggest party, the Democratic Alliance (DA), threatened to quit the government, warning a VAT hike would hurt the poor the most.

Godongwana, a member of President Cyril Ramaphosa’s African National Congress (ANC), had argued the increase was needed as the government was facing a financial crisis.

But with other parties also rejecting the hike, it raised the prospect of parliament taking the unprecedented step of voting down the national budget, forcing him and the ANC to concede.

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