Budget speech: VAT increases by 0.5%, with another 0.5% hike next year

Value-added-tax (VAT) will increase by 0.5%, with the government needing to cover a R60 billion budget shortfall. Finance Minister Enoch Godongwana said another 0.5% increase will then be introduced next year. This will bring the VAT rate to 16% in 2026.

Godongwana announced this on Wednesday while delivering his revised budget speech in Cape Town.

The increase comes after Godongwana proposed a 2% VAT increase, which resulted in disagreements between parties in the government of national unity (GNU) and the postponement of the initial tabling of the budget.

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