South Africa’s 2025 Budget Sparks Public and Political Debate

South Africa’s Finance Minister, Enoch Godongwana, has announced a 0.5% increase in Value Added Tax (VAT) for the current financial year, with an additional 0.5% hike planned for 2026. This measure aims to address urgent revenue needs amidst ongoing political negotiations within the Government of National Unity (GNU). However, critics argue that higher taxes could further constrain consumer spending and economic activity. The Organisation Undoing Tax Abuse (OUTA) expressed concern, stating that the VAT hike disproportionately impacts low- and middle-income households, urging the government to focus on cutting waste and tackling corruption instead. Additionally, the decision to keep personal income tax brackets unchanged for the third consecutive year has raised concerns about diminished purchasing power for taxpayers. Politicians have also voiced apprehensions, emphasizing the potential adverse effects on the poor, who are already burdened by rising electricity and fuel prices, as well as high interest rates.

Source: Forbes Africa