South Africa’s Finance Minister, Enoch Godongwana, has come under fire from several political parties following the announcement of the 2025/2026 budget.
The proposal to increase Value Added Tax (VAT) by 0.5% over two years has sparked widespread criticism.
VAT Hike to Generate Revenue
Godongwana’s budget aims to raise R28 billion in revenue through increased taxation on alcoholic beverages, tobacco products, and a one percentage point VAT hike over two years. The move is intended to support infrastructure development, social grants, education, and healthcare.
However, opposition parties argue that the VAT increase will burden ordinary South Africans, especially the poor and working-class citizens.
Mixed Reactions from Political Parties
While the African National Congress (ANC) Chairperson, Gwede Mantashe, defended the budget as a necessary step for economic growth, other political figures expressed their discontent.
The United Democratic Movement (UDM) Chief Whip, Nqabayomzi Kwankwa, and African Christian Democratic Party (ACDP) MP, Steve Swart, strongly opposed the VAT hike.
Swart emphasized that alternative revenue collection methods, such as recovering the R800 billion owed to the South African Revenue Service (SARS), could be more effective.
A ‘Compromised Budget’
GOOD Party Secretary General, Brett Herron, and Congress of South African Trade Unions (Cosatu) Parliamentary Coordinator, Matthew Parks, labeled the budget as compromised.
They argued that the VAT increase would negatively affect the most vulnerable citizens while failing to address economic growth.
Freedom Front Plus (FF Plus) MP, Wouter Wessels, criticized the budget for lacking austerity measures and failing to reduce the corporate tax rate, which currently stands at 27%, while other countries have lowered theirs to 23%.
Discontent Among Coalition Partners
Government of National Unity (GNU) partner and Democratic Alliance (DA) leader, John Steenhuisen, dismissed the budget as an “ANC budget.”
Similarly, MK Parliamentary leader, Dr. John Hlophe, warned that the VAT increase would disproportionately impact black South Africans who are already struggling under the current economic conditions.
A Budget That ‘Lacks Confidence’
ActionSA MP, Athol Trollip, expressed that the budget does not inspire confidence in the country’s economic future. He criticized the government for failing to cut expenditure on state-owned enterprises and for choosing an option that would directly harm the poor.
“The decision to increase VAT by 0.5% this year and another 0.5% next year is disastrous. It will only worsen the financial strain on black South Africans, who already face economic hardships,” Trollip stated.
Conclusion
As the debate over the proposed VAT hike intensifies, the South African government faces mounting pressure to explore alternative revenue-generation strategies that do not disproportionately affect the poor.
With economic growth stagnating for over a decade, many argue that structural reforms and improved tax collection from defaulters could provide a more sustainable solution.
