The Western Cape High Court has officially suspended South Africa’s planned VAT increase, offering temporary relief just days before the first hike was due to take effect. The court ruled that the initial half-a-percentage-point increase, scheduled for 1 May 2025, along with the second phase set for April 2026, will not proceed for now.
Political economist Khaya Sithole noted that while the suspension provides short-term relief, it raises significant financial concerns. “It is temporary relief because the VAT increase would have been quite painful for everyone across the country,” he said. “Next year’s planned increase would have made it even worse.”
However, Sithole cautioned that halting the VAT hike does not address the country’s deeper fiscal challenges. “We must ask how the National Treasury and the minister plan to balance the books in the meantime,” he said. “They’ve already made it clear that additional funds are needed, there’s a significant budget shortfall, and borrowing more money is not an option.”
The suspension now leaves open the question of how the government will address its funding gap without placing further financial strain on already struggling citizens.
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