Zuko Komisa

South Africa’s value-added tax (VAT) will increase to 16% by 2026/27, with phased increases announced by Finance Minister Godongwana. This is part of a broader plan to raise revenue through various tax measures.
While acknowledging the debate around VAT’s impact, the Minister emphasised the need for economic growth.
The planned increase is expected to generate R13.5 billion in 2025, contributing to a broader strategy of raising R28 billion in 2025/26 and R14.5 billion in 2026/27 through various tax measures.
The February budget was originally planned but delayed due to opposition from the Government of National Unity (GNU) members, who refused to support Finance Minister Godongwana’s proposed two-percentage-point VAT increase.
This disagreement stemmed from the Minister’s aim to generate revenue necessary for funding the Social Relief of Distress (SRD) grant.
“Madam Speaker, this decision was not made lightly. No Minister of Finance is ever happy to increase taxes. We are aware of the fact that a lower overall burden of tax can help to increase investment and job creation and also unlock household spending power.
“We have, however, had to balance this knowledge against the very real, and pressing, service delivery needs that are vital to our developmental goals and which cannot be further postponed,” said Godongwana.
The minister revealed that the National Treasury considered a broad spectrum of tax adjustments beyond VAT, specifically exploring the feasibility of raising corporate and personal income taxes.
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