South Africa’s 2025 Budget Sparks Public and Political Debate
South Africa’s Finance Minister Enoch Godongwana announced that it had added value-added tax (VAT) by 0.5% in the fiscal year and plans to make an additional 0.5% rate hike in 2026. This measure aims to address urgent income needs in ongoing political negotiations within the Government of National Solidarity (GNU) (GNU). However, critics argue that higher taxes may further limit consumer spending and economic activity. The organization’s withdrawal of tax abuse (OUTA) expressed concern, noting that VAT hike disproportionately affects low- and middle-income households, urging the government to focus on reducing waste and addressing corruption. In addition, the decision to keep the scope of personal income tax unchanged for the third consecutive year has raised concerns about the reduction in taxpayers’ purchasing power. Politicians also expressed concerns, highlighting the potential adverse effects on the poor, who are already burdened by rising electricity and fuel prices and high interest rates.
source: Forbes Africa
