South Africans may be in for a shock this week, as Finance Minister Enoch Godongwana has signalled to Cabinet that a tax hike may be needed. Godongwana will table the budget in Parliament on Wednesday.

According to reports, he may increase VAT to compensate for the projected revenue shortfall. VAT may be the only wiggle room the government has left to bump up its coffers as Personal Income Tax and Company tax are already at their limit.

Both the DA and Cosatu have said they would resist any tax increases.

The DA’s spokesperson on Finance Dr Mark Burke says they are deeply concerned by reports in the Sunday Times that tax increases may be tabled.

“The cost of living crisis over the last several years has squeezed households, many of whom are struggling to put food on the table. Even COSATU has warned against hikes to income tax and VAT. Any tax increases will face widespread resistance—not only from Parliament but also from within the Government of National Unity.”

 

Tax increases are on the table as the finance minister runs out of options.https://t.co/1fy3Yz8gmn

— Sunday Times (@SundayTimesZA) February 17, 2025

Burke says the DA expects the 2025 budget to focus on unlocking infrastructure investment, policy reform that results in private sector job growth, and improving efficiency through structural reforms.

He says they also want the government to take measures to alleviate the cost of living crisis, including a reform to fuel levies, and a major expansion of the zero-rated VAT basket.

Cosatu’s Parliamentary Coordinator Matthew Parks says inflicting pain upon the poor and the working class will be rejected.

“Cosatu will vehemently reject any increase in taxes upon the working class, in particular VAT or personal income tax for low-income earners. Such increases would plunge workers and their families who are already bleeding from the rising costs of living and a 400 basis points hike in the repo rate, deeper into debt. A VAT increase will stoke inflation. Such hikes would suck money out of the economy when it is most needed to stimulate growth. It would send a message to society that the government cares more about balancing tables and graphs than workers being able to put food on the table and pay for electricity.”

Parks says additional revenue must rather be secured through boosting the capability of SARS to tackle tax evasion and customs fraud.

“We simply cannot afford another limp budget let alone one that pickpockets workers through VAT or personal income tax hikes.”

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