By Kouthar Sambo
Finance Minister Enoch Godongwana announced a 0.5% increase in value-added tax (VAT) this year, with another increase planned for next year during his National Budget Speech on Wednesday, March 12, 2025. This means the VAT rate will rise to 16% by 2026/27. Additionally, personal income tax brackets and rebates will not be adjusted for inflation.
Godongwana acknowledged the financial pressures faced by households, including high food and fuel prices, as well as rising electricity and transportation costs.
To protect vulnerable households, Godongwana outlined the following measures:
- Increasing social grants above inflation
- Expanding the basket of VAT zero-rated food items to include canned vegetables, dairy liquid blends, and organ meats from sheep, poultry, and other animals.
Not increasing the fuel levy for another year, which will save consumers around R4 billion.
Speaking to VOC News, economist Ulrich Joubert stated that, at face value, the minister is attempting to control expenditure and stabilize the country’s debt.
*Listen further as he unpacks the latest around the budget speech
Photo:@TreasuryRSA
