VAT hike question hangs over Godongwana as he makes second attempt at Budget Speech

CAPE TOWN - Will the finance minister cave and remove a VAT increase from the national budget or will he push ahead with a lesser hike, instead?

That’s the question Finance Minister Enoch Godongwana is expected to answer on Wednesday when he takes a second stab at tabling the 2025 budget in Parliament.

Three weeks ago, his Budget Speech was called off at the last minute, in a first for the country, as GNU partners rejected a proposal to increase the value-added tax rate by two percentage points.

Pundits don't believe Godongwana will be able to avoid increasing taxes completely despite the raging dissent across the board, including from within his own party.

It's widely expected that Godongwana's trade-off will be a smaller percentage point increase to the current VAT rate of 15 percent.

The VAT rate has been left untouched since 2018 but the Treasury says hiking the tax on goods is the lesser of the tax evils.

In budget documents Godongwana was expected to table in February, the Treasury said South Africans were paying less VAT than other emerging economies like India and Brazil.

Cabinet met again on Wednesday morning in a last-ditch attempt to get all parties on the same page, setting the scene for ongoing debate during the parliamentary process that will unfold in the coming weeks.

Godongwana is also expected to pronounce on the continuation of the social relief of distress grant, a major contributor Treasury says for a tax increase to fund the R370 benefit for another year.