IN CONVERSATION WITH JANNIE ROSSOUW
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In a significant shift from previous proposals, Finance Minister Enoch Godongwana has unveiled a revised National Budget—dubbed Budget 3.0—which abandons the planned VAT increase and instead introduces new tax measures expected to generate R18 billion in 2025/26 and R19 billion in 2026/27.
The announcement, made in Parliament on Wednesday, comes as the National Treasury attempts to narrow South Africa’s fiscal gap without burdening consumers with a higher value-added tax, a move that would have disproportionately impacted the country’s poorest households.
The original budget proposal raised concerns across civil society and business sectors over the plan to increase VAT, currently at 15%. With economic growth remaining sluggish and unemployment—especially among youth—remaining alarmingly high, many warned that a VAT hike would be regressive.
Instead, Minister Godongwana has opted for alternative tax strategies. While specific details remain limited, the Minister confirmed that the new revenue streams would focus on improving collections and addressing base erosion rather than imposing broad-based consumer taxes.
“This tax measure alone will not close the fiscal gap over the medium term,” he said, reinforcing the idea that South Africa still faces tough economic decisions in the years ahead.
The announcement, made in Parliament on Wednesday, comes as the National Treasury attempts to narrow South Africa’s fiscal gap without burdening consumers with a higher value-added tax, a move that would have disproportionately impacted the country’s poorest households.
The original budget proposal raised concerns across civil society and business sectors over the plan to increase VAT, currently at 15%. With economic growth remaining sluggish and unemployment—especially among youth—remaining alarmingly high, many warned that a VAT hike would be regressive.
Instead, Minister Godongwana has opted for alternative tax strategies. While specific details remain limited, the Minister confirmed that the new revenue streams would focus on improving collections and addressing base erosion rather than imposing broad-based consumer taxes.
“This tax measure alone will not close the fiscal gap over the medium term,” he said, reinforcing the idea that South Africa still faces tough economic decisions in the years ahead.
