On April 2, 2025, South Africa’s parliament passed the 2025 Budget, despite resistance to a VAT increase. The budget received support from 194 lawmakers with 182 against it after a delayed vote. Finance Minister Enoch Godongwana defended the VAT hike as necessary for funding public services amid fiscal pressures. The DA opposed the budget over tax concerns, but coalition negotiations led to its approval.
On April 2, 2025, South Africa’s parliament approved the 2025 Budget proposed by Finance Minister Enoch Godongwana, despite opposition related to a value-added tax (VAT) increase. The budget received a narrow approval with 194 votes in favor and 182 against, with no abstentions. This approval followed a delay initially planned for February, caused by disputes over the proposed VAT changes.
The budget includes a phased VAT increase of 0.5 percentage points in the 2025/26 financial year, and another 0.5 percentage point rise in 2026/27, potentially raising the VAT rate to 16 percent. Godongwana emphasized the importance of this tax adjustment to maintain funding for crucial public services in sectors including health, education, and security.
Political opposition intensified, particularly from the Democratic Alliance (DA), which expressed concerns over the proposed tax hikes. Initially, the DA indicated conditional support, contingent on the government retracting the Expropriation Act. However, after extensive political negotiations, the ruling African National Congress secured adequate support from minor coalition factions to ensure the budget’s passage.
The South African parliament’s approval of the 2025 Budget, amid significant political opposition to VAT increases, highlights the ongoing fiscal challenges the government faces. The phased VAT hike is aimed at addressing funding gaps in essential services, although it has sparked strong resistance from the DA. Ultimately, through coalition negotiations, the ruling party was able to push the budget through.
Original Source: english.news.cn
