ActionSA has announced a significant victory in the ongoing discussions surrounding South Africa’s fiscal policy. The party successfully moved a recommendation in the Finance Committee’s report that has resulted in the cancellation of the proposed 0.5 percentage point increase in Value-Added Tax (VAT) for the 2025/26 financial year. The move also addresses concerns over income tax bracket creep.

According to ActionSA’s parliamentary leader, Athol Trollip, the party has opposed the proposed VAT hike, part of the government’s broader strategy to increase revenue, from the start. The party argued that the increase would disproportionately affect lower- and middle-income households, which are already struggling with the cost-of-living crisis.

“ActionSA will remain focused on cutting wasteful expenditure, curbing corruption, and prioritising service delivery over reckless tax increases. We call on all stakeholders to contribute to sustainable and equitable revenue solutions that do not compromise the financial well-being of our citizens,” said Trollip in a statement.

In addition, ActionSA raised concerns over the failure to adjust personal income tax brackets for inflation, which would have subjected taxpayers to bracket creep—a phenomenon in which individuals are pushed into higher tax brackets without a corresponding increase in their income, effectively reducing their disposable income.

Following ActionSA’s intervention, the Finance Committee’s report now includes recommendations to eliminate these tax hikes. The report also calls for the urgent development of alternative revenue proposals to cover the R28 billion shortfall caused by the scrapping of the VAT increase. Parliament and National Treasury have been tasked with finalizing these alternative proposals within the next 30 days.

In a statement, ActionSA emphasized that the victory marks a critical step in protecting South Africans from what the party described as regressive and unsustainable tax increases. ActionSA also reaffirmed its commitment to reducing government inefficiencies, ensuring that any new revenue proposals are balanced by corresponding expenditure savings.

The Finance Committee’s report, which includes these changes, is scheduled to be debated in the National Assembly on Wednesday.

South Africans no longer punished to pay 0.5-point increase in taxes.

ActionSA Member of Parliament @AlanDBeesley MP earlier today presented our proposal to the Parliamentary Standing Committee to reverse the VAT hike and provide South Africans with much-needed income tax… pic.twitter.com/3XiCEnRstT

— ActionSA (@Action4SA) April 1, 2025