2025 South African Budget

Originally scheduled for 19 February 2025, the budget was postponed due to disagreements within the Government of National Unity, particularly over a proposed two-percentage-point VAT increase. In the revised budget, the minister proposed a more gradual approach: a 0.5 percentage point increase effective 1 May 2025 and another 0.5 percentage point increase on 1 April 2026, which would raise the VAT rate from 15% to 16% over two years.{{cite web |title=Budget Speech 2025 |url=https://www.treasury.gov.za/documents/national%20budget/2025/speech/speech.pdf |publisher=National Treasury |date=12 March 2025 |access-date=14 April 2025}}

Several revenue-enhancing measures were introduced:

• VAT – The phased increase is expected to generate approximately R13.5 billion in additional revenue during 2025.{{cite news |title=VAT to rise to 16% in South Africa |url=https://businesstech.co.za/news/budget-speech/816535/vat-to-rise-to-16-in-south-africa/ |work=BusinessTech |date=12 March 2025 |access-date=14 April 2025}}

• Personal income tax – Tax brackets and credits were not adjusted for inflation, resulting in increased effective taxation through fiscal drag.{{cite web |title=Budget Review 2025 – Chapter 3 |url=https://www.treasury.gov.za/documents/national%20budget/2025/review/Chapter%203.pdf |publisher=National Treasury |date=12 March 2025 |access-date=14 April 2025}}

• Excise duties – Increases above the rate of inflation were applied to alcohol and tobacco products.

• Carbon tax – The rate increased from R190 to R236 per tonne of carbon dioxide equivalent as of 1 January 2025.{{cite news |title=South Africa’s 2025 Budget in a nutshell |url=https://businesstech.co.za/news/budget-speech/816538/south-africas-2025-budget-in-a-nutshell/ |work=BusinessTech |date=12 March 2025 |access-date=14 April 2025}}
• VAT rate reversal - South African Ministry of Finance confirmed on 24 April 2025 that the VAT rate would remain at 15%, effective 1 May 2025.

The budget increased funding to key service areas:

• Health – R28.9 billion was allocated to support healthcare, including expanded HIV treatment programmes.{{cite news |title=South African budget boosts HIV funding |url=https://apnews.com/article/199795bdb1aa44aefbc5469e798d7acc |work=Associated Press |date=12 March 2025 |access-date=14 April 2025}}

• Defence – R5 billion was allocated to strengthen military capacity in light of regional instability.

• Social grants – Grants were increased, with old age and disability grants raised to R2,315 and child support grants to R560.

The proposed VAT increase faced significant opposition within the ruling coalition. The Democratic Alliance publicly opposed the increase, citing its disproportionate impact on lower-income households.{{cite news |title=Budget VAT hike faces pushback from coalition |url=https://apnews.com/article/8adb9dca893933aa17279394a6f2131c |work=Associated Press |date=12 March 2025 |access-date=14 April 2025}} The party also launched a legal challenge questioning the budget’s procedural legality.{{cite news |title=South Africa’s DA challenges legality of budget process in court |url=https://www.reuters.com/world/africa/south-africas-da-challenges-legality-budget-process-court-2025-04-03/ |work=Reuters |date=3 April 2025 |access-date=14 April 2025}}

In light of mounting resistance, reports suggested that the African National Congress may reconsider the VAT hike.{{cite news |title=Final nail in the coffin of the VAT hike in South Africa: report |url=https://businesstech.co.za/news/government/820690/final-nail-in-the-coffin-of-the-vat-hike-in-south-africa-report/ |work=BusinessTech |date=9 April 2025 |access-date=14 April 2025}}

Despite the political friction, tax revenue for 2024/25 increased by over 6%, reaching R1.855 trillion. However, the economy continues to face challenges, including high unemployment, constrained electricity supply, and a fragile investment climate.{{cite news |title=South Africa’s tax take rises over 6% in 2024/25 fiscal year |url=https://www.cnbcafrica.com/2025/south-africas-tax-take-rises-over-6-in-2024-25-fiscal-year/ |work=CNBC Africa |date=8 April 2025 |access-date=14 April 2025}}

Category:South African Budgets

Budget

South Africa