KEY POINTS
- The proposed South Africa VAT hike faces opposition from major parties.
- The DA demands economic reforms before supporting any tax hikes.
- The EFF and MK Party reject the VAT hike, citing economic risks.
South Africa’s proposed increase in Value Added Tax (VAT) is facing stiff opposition from major political parties, casting doubt on whether the proposal will pass in Parliament.
Finance Minister Enoch Godongwana recently presented the proposal as part of the 2025 national budget, suggesting a 0.5 percent VAT increase this year and another hike in 2026, potentially raising the VAT rate to 16 percent.
However, the proposal faces strong resistance, particularly from the Democratic Alliance (DA) and the Economic Freedom Fighters (EFF). Both parties have expressed concerns about the economic impact of the tax hike on ordinary South Africans.
Parliament is currently reviewing the budget proposal and will hold final deliberations on April 2. The African National Congress (ANC) needs support from at least 50 percent of Members of Parliament (MPs) to pass the budget.
DA demands reforms and opposes permanent tax increases
DA leader John Steenhuisen has been vocal about his party’s opposition to the VAT increase, describing it as a measure that would further burden South Africans without offering sustainable solutions.
“The ANC VAT budget doesn’t have a majority, and the DA won’t give it one. It is now up to the ANC to fix the mess it has created,” Steenhuisen said.
DA spokesperson Hlumelo Jubase echoed the sentiment, emphasizing that the DA will only consider supporting the increase if it is temporary and accompanied by significant economic reforms.
“We have made it clear to the ANC in the GNU that we would not support any increase in taxes unless those increases were temporary and the ANC agrees to a series of major reforms that will grow the economy, create jobs, reduce waste, and bring down taxes within three years,” Jubase stated.
According to IOL, he criticized the ANC for insisting on permanent VAT increases, warning that such decisions would worsen poverty and threaten the country’s economic stability.
EFF and MK Party also reject proposed South Africa VAT hike
The EFF strongly opposes the proposed rise in VAT according to statements from their senior party members.
“We reject any VAT hike. Increasing VAT will not lead to sustainable revenue growth but will instead put poor and working households under more pressure,” the party member said.
The EFF demands multiple political party talks to update the budget proposal while having it reflect South African needs at large.
Des van Rooyen from the MK Party expressed his willingness to modify the proposed budget to stop the increasing economic gaps among citizens.
ANC defends proposal amid accusations of anti-transformation agenda
In defense of the VAT tax increase, ANC Secretary General Fikile Mbalula stated that the DA opposed the budget for pushing an agenda against transformation.
“We will not be deterred by those who wish to see South Africa return to the ‘good old days’ of apartheid economic privilege.
The DA seeks to use the budget process as leverage to renegotiate its role within the GNU, not because it has the interests of the people at heart but because it is determined to advance an agenda that prioritizes privilege over progress,” Mbalula stated.
As the debate continues, South Africans await the final outcome of the budget deliberations, which will significantly shape the country’s economic future.
