South Africa scrapped plans to raise its value-added tax from 15 percent to 16 percent, which would have started on May 1. The finance ministry changed course after major political parties fought against the tax hike proposed in the 2025 national budget. Both the African National Congress and Democratic Alliance opposed the measure, creating tension in their coalition government. The DA went as far as filing a court case and voted against the budget framework because they felt trust was breaking down among coalition partners.
Officials at the finance ministry said they made this decision after talking with various political parties and looking at what parliament suggested. The country will miss out on about 75 billion rand ($4.02 billion) over the next few years without this tax increase. Finance leaders plan to ask parliament for changes to keep government finances stable despite having less money coming in. Finance Minister Enoch Godongwana had earlier warned that keeping VAT rates the same might hurt public finances badly.
Officials at the finance ministry said they made this decision after talking with various political parties and looking at what parliament suggested. The country will miss out on about 75 billion rand ($4.02 billion) over the next few years without this tax increase. Finance leaders plan to ask parliament for changes to keep government finances stable despite having less money coming in. Finance Minister Enoch Godongwana had earlier warned that keeping VAT rates the same might hurt public finances badly.
