South Africa scraps controversial VAT hike

RT.com
24 Apr 2025, 18:49 GMT+10

The decision follows extensive consultations with political parties, according to the National Treasury

Finance Minister Enoch Godongwana has scrapped the 0.5% Value Added Tax (VAT) hike that was set to kick in on May 1. VAT will remain at 15%.

The decision to forgo the increase follows extensive consultations with political parties, and careful consideration of the recommendations of the parliamentary committees, the National Treasury confirmed in a statement on Wednesday night.

By not increasing VAT, the estimated revenue will fall short by around R75 billion over the medium-term, his ministry said.

According to Treasury, Godongwana has also written to the Speaker of the National Assembly Thoko Didiza, informing her that he is withdrawing the plan.

It added that Parliament will be requested to adjust expenditure in a manner that ensures that the loss of revenue does not harm South Africa's fiscal sustainability.

"The decision not to increase VAT means that the measures to cushion lower-income households against the potential negative impact of the rate increase now need to be withdrawn and other expenditure decisions revisited.

"To offset the unavoidable expenditure adjustments, any additional revenue collected by SARS may be considered for this purpose going forward," the statement reads.

However, Godongwana will introduce a revised version of the budget without the VAT increase.

The initial proposal for a VAT hike was motivated by an urgent need to restore the funding of the frontline services that had suffered reductions.

First published by IOL

Watch latest videos

News RELEASES

Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Sierra Leone Times.

More Information

null in null

Business

Section

Cambodia, China restart Mekong-Gulf of Thailand canal project

China, Cambodia to fund 94-mile canal from Mekong to Gulf of Thailand

PHNOM PENH, Cambodia: Cambodia and China have revived work on a stalled canal project that aims to connect the Mekong River to the...

US Justice Department opens antitrust trial against Google

Google may use AI to extend search monopoly, DOJ says

WASHINGTON, D.C.: The U.S. Department of Justice kicked off its landmark antitrust trial against Google this week, warning that the...

U.S. stocks jump after Trump backtracks on China, Fed

U.S. stock markets surge after Trump backflips

NEW YORK, New York - U.S. President Donald Trump retreated from his harsh approach to trade negotiations with China on Wednesday, and...

Pharmacies expand same-day prescription delivery

More pharmacies offer to speed prescription deliveries to customers

WASHINGTON, D.C.: More U.S. pharmacies are promising to get prescriptions to your doorstep faster than ever, with same-day delivery...

Trump begins work on new offshore drilling plan

Trump administration kicks off plan for expanded offshore drilling

WASHINGTON, D.C.: The Trump administration has launched the first step in crafting a new five-year offshore oil and gas leasing program...

Capital One wins approval for merger with Discover Financial Services

Capital One, Discover deal approved by US bank regulators

WASHINGTON, D.C.: U.S. regulators have approved Virginia-based Capital One's $35.3 billion acquisition of Discover Financial Services,...

Africa

Section