Finance Minister Scraps Controversial VAT Hike, Plans New Budget Adjustments

Finance Minister Enoch Godongwana has decided to reverse the contentious VAT increase initially proposed in the 2025 Budget.

Instead, the VAT rate will remain at 15% from 1 May 2025, avoiding the planned 0.5% hike.

National Treasury announced that this decision follows extensive consultations with political parties and parliamentary committees. However, it comes at a cost—an estimated R75 billion revenue shortfall over the medium term.

To address this, the Minister is withdrawing the Appropriation and Division of Revenue Bills and will soon present revised versions with adjusted government spending.

Parliament will be asked to ensure these changes maintain fiscal sustainability.

Treasury acknowledged that while alternative revenue options are being explored, many present greater risks to growth and jobs or won’t generate immediate returns.

A revised budget will be tabled in the coming weeks.

REACTIONS

BREAKING NEWS: We stood firm when it counted and we’ve won for you! The VAT increase has been reversed!

When we voted in support of the fiscal framework, misinformation campaigns came at us fast and loud. But we didn’t waver..

We didn’t run away to the courts. We knew that… pic.twitter.com/crkJDOhxSf

— BOSA (@BuildOneSA) April 23, 2025

💰The VAT hike has fallen! This is a win for every household, every breadwinner, and every South African who cannot afford higher prices at the till.

We would like to thank you for uniting behind the cause to reject the VAT hike.

From Parliament to the streets and in court. 🇿🇦 pic.twitter.com/O4eWd6AQcc

— Democratic Alliance (@Our_DA) April 24, 2025

We welcome the anc government’s retreat on the nonsensical and senseless VAT increase proposal. The sad and painful reality that a larger number of so called public representatives had voted in favour of the VAT increase, against the will of the people. This proves uMKhonto… pic.twitter.com/HzpAM68ZpW

— Floyd Shivambu (@FloydShivambu) April 23, 2025