Minister Finance, Enoch Godongwana, will deliver the 2025 Budget Speech on Wednesday, from 14:00, in Parliament, Cape Town, where he will allocate money to South Africa’s priorities.
Godongwana will also outline how government’s work and programmes will be funded, which areas will see austerity and spending cuts, and forecast the future of South Africa’s economy, especially in light of recent improvement in the unemployment numbers, with the joblessness rate dropping by 0.2 percentage points to 31.9% in the fourth quarter of 2024.
WATCH BUDGET SPEECH 2025 LIVE BELOW
In the run-up to Budget Speech 2025, taxes – particularly VAT – have been dominating conversation, with murmurs swirling that Godongwana could take VAT from 15% to 16% in order to “manage an extremely constrained budget”, economists at law Avias Ngwenya and Marylla Govender told TimesLIVE.
If Godongwana does announce a VAT increase during Budget Speech 2025, it will be only the second time in democratic South Africa that the indirect tax on the consumption of goods and services in the economy is changed.
Opposition to VAT hike
Some quarters have expressed fierce opposition to a VAT hike, saying it will lead to “devastation for the working class and the poor”.
The South African Communist Party (SACP), a long-time ally to the President Cyril Ramaphosa’s ANC, says instead, Godongwana should tax the rich.
“What the National Treasury must do is to introduce a wealth tax and a more progressive tax appoach, focusing on generating revenue from the rich and wealthy to fund development and key priorities, amid the high rates of inequality that characterise South Africa,” the SACP said in a statement on Monday.
The communists have also warned that should a VAT hike be announced during Budget Speech 2025, they will hit the streets.
“The SACP will not stop at merely rejecting such a budget. We will embark on a deep-going process of mass mobilisation of the working class against it until victory is achieved and secured. This has far-reaching political implications,” the party said ahead of Budget Speech 2025.
The other red party, the Economic Freedom Fighters (EFF), have also rejected any move to take VAT to 16%, instead advocating for a return to previous levels.
“We reject anything that suggests that our people must be taxed more. Corporate income tax must be increased [and] VAT must be reduced back to 14%,” EFF treasurer-general Omphile Maotwe told SABC News ahead of the Gondongwana’s address.
Ahead of the Budget Speech, do you think a VAT increase is justified?
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