TREASURY FOLDS ON VAT HIKE
Finance Minister Enoch Godongwana has finally caved to widespread pressure, canning the
planned 0.5 percentage point hike in VAT.
National Treasury announced the decision in a statement issued just after midnight, saying
the Minister will shortly introduce the Rates and Monetary Amounts and the Amendment of
Revenue Laws Bill (Rates Bill), which proposes to maintain the VAT rate at 15% from 1 May
2025, instead of the proposed increase to VAT announced in the Budget in March.
Godongwana’s announcement follows a disastrous day in court for his legal counsel on
Tuesday and sustained pressure from the ANC and a range of parties, both in and outside
the GNU, to withdraw the increase.
It is unclear what mechanisms Godongwana has to withdraw the VAT increase triggered by
his announcement in his Budget speech on 12 March.
The VAT Act, which the DA seeks to declare unconstitutional, allows the Minister of Finance
to increase VAT simply by announcing it, subject to a Bill being passed within 12 months.