South African Parliament Approves 2025 Budget Amid VAT Opposition

On April 2, 2025, the South African parliament passed the 2025 Budget by Finance Minister Enoch Godongwana, despite opposition to a proposed VAT increase. The budget was approved narrowly, amidst significant political debate and negotiations. The VAT is set to rise to 16 percent by 2026/27 to aid government funding for crucial public services.

On April 2, 2025, South Africa’s parliament approved the 2025 Budget introduced by Finance Minister Enoch Godongwana, despite significant opposition regarding a controversial increase in value-added tax (VAT). The budget was ratified with a narrow vote, tallying 194 in favor and 182 against, with no abstentions recorded.

The budget’s initial proposal was postponed from February due to internal conflicts related to the VAT increase. Minister Godongwana detailed a phased VAT raise during a budget review on March 12, suggesting an increment of 0.5 percentage points in both the 2025/26 and 2026/27 financial years, eventually setting the rate at 16 percent.

Godongwana defended the tax hike as essential for maintaining public services amid rising fiscal pressures on sectors like health, education, transportation, and security. However, this plan drew strong criticism, particularly from the Democratic Alliance (DA), which opposed the budget due to worries over taxes and government fiscal priorities.

Throughout weeks of political negotiations and debates, support from smaller coalition partners and other political entities enabled the ruling African National Congress to eventually secure enough votes to pass the budget. The DA had previously indicated conditional support dependent on the withdrawal of the Expropriation Act, yet the budget received little support from them during the vote.

The approval of South Africa’s 2025 Budget marks a pivotal moment amid contentious debates surrounding the increase of VAT. Despite considerable opposition from significant political factions, the ruling coalition managed to rally support from smaller parties to pass the budget. This move aims to uphold vital public services under pressing fiscal constraints, as outlined by Finance Minister Godongwana in his defense of the necessary tax adjustments.

Original Source: english.news.cn