Finance Minister Enoch Godongwana has announced a staggered increase in Value-Added Tax (VAT), raising it by 0.5 percentage points on May 1, 2025, followed by another 0.5 percentage point hike next year. By the 2026/27 financial year, VAT will stand at 16%.
The decision, unveiled during his revised Budget Speech in Parliament on March 12, follows heated debate over an initial proposal to raise VAT by 2 percentage points in a single adjustment.
Despite the revised approach, the announcement has sparked backlash from political parties, civil society groups, and economists, who argue that the budget fails to tackle South Africa’s economic challenges effectively.
Speaking on VOC Breakfast, economist Dawie Roodt criticized the budget as a missed opportunity to cut government spending.
“I am disappointed. The Minister of Finance is not reducing state expenditure, even though the government is highly inefficient. There are many areas where spending could have been cut, but he chose not to,” said Roodt.
He also took issue with the increase in personal income tax, arguing that it was introduced through a “backdoor technique” and ultimately exceeds the VAT hike.
“Debt is expected to rise even further. Every year, the minister promises to stabilize debt, yet it never happens. This means we are heading for serious financial trouble,” Roodt warned.
Listen to the full interview below:
VOC News
Photo: PresidencyZA/X
