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In a significant policy reversal, the South African Treasury had announced that it will no longer proceed with the planned 0.5% increase in Value Added Tax (VAT) which was scheduled to take effect at the beginning of May.
This decision has been widely welcomed by opposition parties and analysts, signaling a potential shift toward more sustainable and growth-oriented fiscal policies amid ongoing economic challenges.
Finance Minister Enoch Godongwana had initially proposed the VAT increase as part of the 2025/26 national budget, aiming to raise an additional 2% in revenue with approximately R40 billion to help close South Africa’s widening fiscal deficit.
The government argued that this measure was necessary to stabilize public finances and fund critical social programs.
The proposal met immediate resistance from opposition parties, trade unions, and civil society organizations..
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