A big blow for all

BUDGET: GOVT THINKS HIGHER INCOME HOUSEHOLDS WILL BEAR THE BRUNT

- Amanda Visser Moneyweb

Ordinary South Africans are walking away from the 2025 budget bruised and bloodied. Government not only proposed an increase in the value-added tax (VAT) rate, but their income tax burden has increased by R18 billion.

The partial relief for bracket creep provided for in the original version of the 2025 budget has been wiped off the table. There will be no inflationary adjustment, not even for low-income households.

Nor is there any inflationary increase in medical credits.

But there will be above-inflation sin tax increases.

Despite massive resistance to any tax increases, Finance Minister Enoch Godongwana raised the VAT rate by 0.5%, effective 1 May this year, and another 0.5 percentage points in 2026.

Tipping point The expected collection from the VAT increase is R13.5 billion in 2025 and R15.5 billion in 2026.

Aneria Bouwer, senior consultant at Bowmans, says there is the possibility that these projections will not materialise because of the overall increased tax burden.