Cape Town – Deputy President Paul Mashatile has expressed optimism that political parties will reach a solution to avoid the proposed 0.5% VAT increase, set to take effect on 1 May.
Speaking at a Good Friday church service in Thaba Nchu, he urged prayers for national leaders as discussions continue.
The VAT hike, part of Finance Minister Enoch Godongwana’s budget, has faced opposition from the DA, a partner in the ANC-led Government of National Unity (GNU).
Although the budget passed with the support of ActionSA and the IFP, objections to the VAT increase persist.
Mashatile said discussions on alternatives are ongoing and a decision could be made soon.
This morning, together with ANC NEC and PEC leaders in the Free State we visited the Assemblies of God in Thaba Nchu as part of our visits to churches this Easter.
The church has an important role to play in our communities, strengthening social cohesion and promoting good… pic.twitter.com/Hqz1y9b9uq
— Paul Mashatile🇿🇦 (@PMashatile) April 18, 2025
“I think so far, they have met all the parties that have agreed to come, so we will know by Monday where to – but I’m positive that we will find a solution,” he said, according to SABC News.
Meanwhile, Godongwana faces pressure to find R13.5 billion elsewhere if the VAT hike is scrapped, as political support for it — including within the ANC — is waning.
The minister confirmed on Thursday that South Africa’s Value Added Tax (VAT) will increase by 0.5 percentage points on May 1, 2025, with another 0.5 percentage point rise planned for April 1, 2026.
According to reports, he justified the hike by warning of severe consequences to state finances if it is not implemented, including spending cuts or increased borrowing.
“Government would be immediately forced either to cut expenditure or increase borrowing,” IOL quoted Godongwana as saying.
He defended VAT as a broad-based and efficient revenue source, adding that South Africa’s current VAT rate remains relatively low compared to other countries.
“In making this decision, the government carefully considered the potential contributions of each of the main tax instruments. VAT is an efficient source of revenue. It is broad based, and its design is simple with minimal exceptions.
“Moreover, South Africa’s VAT rate is still relatively low compared with peer countries,” he said.
