South Africa’s Budget Review and the Controversial VAT Increase Ahead

South African lawmakers will evaluate the 2025 budget and a proposed VAT hike amid political challenges. The revised budget has faced significant opposition, and without agreement, it may not pass by the fiscal year-end on March 31, marking an unprecedented situation. Crucial deadlines and legislative procedures will dictate how the budget is handled moving forward, with implications for implementation of the VAT hike.

In the coming weeks, South African lawmakers will closely examine the 2025 budget, with discussions on a proposed increase in value-added tax (VAT). Finance Minister Enoch Godongwana presented a revised budget on March 12, which was largely rejected by major parliamentary parties despite reducing the proposed VAT hike from two percentage points to one, spread over a two-year period. This situation presents a challenge as it is the first time since the post-apartheid era that a budget may not be approved before the end of the fiscal year on March 31.

In summary, South Africa faces a critical moment regarding its budget and potential VAT hike. The government must navigate a complex parliamentary landscape to secure approval. Failure to pass the budget by the start of the new fiscal year will lead to reliance on the previous year’s budget. Meanwhile, the National Treasury has indicated the possibility of implementing the VAT increase independent of the budget’s approval, although this could lead to further complications if the change is contested in parliament.

Original Source: money.usnews.com