On April 2, 2025, South Africa’s parliament passed the 2025 Budget proposed by Finance Minister Enoch Godongwana, despite opposition over a VAT hike. The budget was approved with a narrow margin of 194 to 182 votes and includes plans to increase VAT to 16 percent by the 2026/27 fiscal year. The ruling African National Congress secured support from smaller coalition partners to pass the budget amid fierce political debate.
On April 2, 2025, the South African parliament approved the 2025 Budget proposed by Finance Minister Enoch Godongwana, despite significant opposition regarding a controversial increase in value-added tax (VAT). The bill passed narrowly, with 194 votes in favor and 182 against, while all lawmakers participated in the voting, resulting in no abstentions.
Originally scheduled for discussion in February, the budget was postponed due to disagreements concerning the proposed VAT hike. On March 12, Minister Godongwana presented the budget review, which detailed a phased VAT increase aimed at addressing government funding shortfalls. This plan included raising VAT by 0.5 percentage points in the 2025/26 fiscal year and another 0.5 percentage points the following year, potentially elevating the rate to 16 percent by the 2026/27 year.
In his speech, Minister Godongwana justified the tax hike as essential for maintaining public services amidst escalating fiscal pressures in the health, education, transport, and security sectors. However, this increase led to substantial political dissent. The Democratic Alliance (DA), representing the second-largest share in the ruling coalition, opposed the budget due to worries concerning tax increases and government expenditure priorities. Prior to the vote, the DA had indicated that they might support the budget if the government retracted the Expropriation Act.
Following extensive political discourse and debates, the ruling African National Congress garnered sufficient support from smaller coalition partners and other parties to facilitate the budget’s passage through parliament.
Ultimately, the decision reflects ongoing tensions regarding fiscal management and political negotiations in South Africa, with significant implications for the nation’s financial policy moving forward.
In summary, the South African parliament’s approval of the 2025 Budget amidst intense opposition underscores the complexity of managing fiscal policies in a coalition government. The planned VAT increase is aimed at ensuring essential public services are funded adequately. However, it has sparked considerable debate about priorities in government spending and tax plans, reflecting broader political divisions within the government.
Original Source: english.news.cn
