Lower VAT hikes included in delayed Budget that also draws on contingencies to match spending
Finance Minister Enoch Godongwana tabled his delayed Budget on Wednesday that included lower, yet still controversial, increases to the value-added tax (VAT) rate, as he sought to hold the fiscal-consolidation line amid rising spending pressures. The new proposal involves increasing the VAT rate by 0.5 percentage points in 2025/26 to 15.5% and by 0.5 percentage points in 2026/27 to 16%, rather than the immediate two percentage point hike to 17% proposed in the aborted Budget of February 19.
Finance Minister Enoch Godongwana tabled his delayed Budget on Wednesday that included lower, yet still controversial, increases to the value-added tax (VAT) rate, as he sought to hold the fiscal-consolidation line amid rising spending pressures. The new proposal involves increasing the VAT rate by 0.5 percentage points in 2025/26 to 15.5% and by 0.5 percentage points in 2026/27 to 16%, rather than the immediate two percentage point hike to 17% proposed in the aborted Budget of February 19.
