Despite immense opposition to increasing Value Added Tax, Finance Minister Enoch Godongwana has officially tabled a proposed increase during his Budget Speech 2025 address.
Speaking in Cape Town on Wednesday, Godongwana confirmed that Treasury has compromised with the initially planned increase of 2%.
Budget Speech 2025 sees VAT increase announced
Godongwana has announced that VAT, currently at 15%, will increase by half a percentage point in 2025/26 and another half a percentage point in the following year.
The minister revealed that this increase is due to pressures to spend in the health, education, transport and security sectors.
“There are several persistent spending pressures in health, education, transport and security.
These have to do with the government properly fulfilling its service delivery mandate.
After careful consideration, the government has decided to fund these. Deferring the funding
of these sectors further would compromise the government’s ability to meet its constitutional
obligations to the people.” Godongwana revealed.
The minister is adamant that this decision was not taken lightly amid growing pressures against the proposed increase.
“Madam Speaker, this decision was not made lightly. No Minister of Finance is ever happy to
increase taxes. We are aware of the fact that a lower overall burden of tax can help to increase investment
and job creation and also unlock household spending power.We have, however, had to balance this knowledge against the very real, and pressing, service delivery needs that are vital to our developmental goals and which cannot be further postponed.” Godongwana explained.
Opposition against Budget Speech 2025 heightens
Ahead of the Budget Speech, Democratic Alliance leader John Steenhuisen confirmed that the party will not be supporting the budget in its current form.
“Good afternoon, South Africa. The DA will not support the budget in its current form. We will continue to fight for economic growth and jobs.” Steenhuisen confirmed.
Additionally, the Economic Freedom Fighters and a host of trade unions have also voiced their intentions to challenge the decision to increase the VAT burden on South Africans.
Do you agree with the decision to increase VAT?
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