South Africa’s Proposed VAT Hike Faces Reversal Amid Political Pushback

As of April 14, 2025, South Africa's proposed Value-Added Tax (VAT) increase is facing significant opposition and is likely to be withdrawn.​

Proposed VAT Increase

The National Treasury initially planned to raise the VAT rate from 15% to 15.5% on May 1, 2025, and to 16% on April 1, 2026, aiming to generate an additional R13.5 billion in revenue to support increased spending on health and defense .

Opposition and Political Dynamics

The proposed VAT hike has encountered strong resistance from various political parties, including the Democratic Alliance (DA), which is part of the Government of National Unity (GNU). The DA and other parties have expressed concerns about the regressive nature of the tax increase, particularly its impact on low- and middle-income households . The Parliamentary Budget Office also criticized the proposal, highlighting that it would disproportionately burden vulnerable populations.​

In response to the mounting opposition, the African National Congress (ANC) has indicated a willingness to reconsider the VAT increase. Reports suggest that the ANC is likely to abandon the plan due to the lack of support from its coalition partners and the potential risk to the stability of the GNU .​

Current Status

While the VAT increase remains part of the budget on paper, the ANC is under pressure to find alternative revenue sources to fill the R13.5 billion gap that would result from scrapping the hike. Finance Minister Enoch Godongwana is expected to explore other options to address the fiscal shortfall .​

As the situation develops, the proposed VAT increase appears unlikely to proceed in its current form.​