Coalition Takes Wrangling Over Tax In The Budget To Parliament

The coalition battle over taxes will move from the political shadows to parliaments finance committees after Finance Minister Enoch Godongwana insisted on increasing VAT , although he halved his initial proposal of a two percentage point hike.

When he delivered it to parliament on Wednesday, Godongwana announced staggered 0.5 percentage point increases in 2025-26 and the following financial year, which will bring the VAT rate to 16 by 2026-27, and pull in expected additional revenue of R13.5 billion and R14.3 billion, respectively.

In the budget he was forced to abandon at the last moment last month, Godongwana had hoped to cover a R60 billion revenue shortfall for education, health, transport and security through higher VAT.

To help make up the difference, he is clawing back R19.5 billion through fiscal drag by reversing his decision last month to adjust personal income tax brackets and medical tax credits for inflation.

These will now remain as is for the second year in a row.