South Africa 2025 Budget: Fiscal steps get nod, VAT set to rise
The Standing Committee on Finance's report on the national budget was also approved, with 194 votes in favour and 182 against. This decision sets the stage for key financial policies shaping South Africa's economic outlook in the coming year.
"The question that the 2025 Fiscal Framework and Revenue Proposals and the report of the Standing Committee are thus adopted,' presiding officer Cedric Frolick said after the votes were counted.
This means the government has approved the 2025/26 National Budget, tabled on Wednesday, 12 March, for a phased increase in the value-added tax (VAT) rate. The rate will rise by half a percentage point in 2025/26 and another half a percentage point in 2026/27, bringing the rate to 16% by the latter year. These measures are expected to generate an additional R28bn in 2025/26 and R14.5bn in 2026/27.
Earlier in the debate, chairperson of the Standing Committee on Finance Mkhacani Maswanganyi outlined the steps taken since Finance Minister Enoch Godongwana delivered the Budget Speech in March.
'The Minister, together with the commissioner of the South African Revenue Service (Sars), briefed the committee on Friday, 14 March 2025. On 18 March…the committees of Finance, both in the NCOP [National Council of Provinces] and the NA [National Assembly] received the post-budget input from the Parliamentary budget office and the financial and fiscal commission.
'The committee issued adverts for public hearings…on websites, social channels and print media. The committees held public hearings on 25 March 2025 [and] we received 51 submissions – 29 written and 22 orally.
'National Treasury and Sars responded to the issues raised during the public hearings and engaged with the committees and stakeholders on 28 March 2025,' he said.
Following that, the committee secretariat sent out a draft report and set an agenda meeting for both the Standing and Select committees on Finance to consider and adopt the report.
'The report…is a result of an extensive process,' Maswangayi said.
Federal Leader of the Democratic Alliance (DA), John Steenhuisen, said the DA does not support the budget in its current form. He said the party will file papers in the Western Cape High Court to challenge Parliament's passing of the 2025/26 National Budget.
"This VAT hike budget will make life more expensive for everyone and the DA will go to court to fight for the interests of all South Africans," he said.
The new VAT increase in South Africa is scheduled to take effect on Thursday, 1 May 2025.
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