Finance Minister Enoch Godongwana unveiled the 2025 Budget on Wednesday 15 March at the Cape Town City Hall. He proposed a VAT increase to stabilize the economy amid rising debt.
“This budget ensures fiscal stability while addressing essential services,” he stated. The proposed hike from 15% to 15.5% on Thursday has sparked public concern. Additionally, another increase is expected next year, leading to further debate.
An extra R28,9 billion is allocated to health care, particularly for medical staff and HIV treatment. “Health-care investment is non-negotiable,” said Godongwana. Meanwhile, R5 billion is earmarked for military operations, while debt is projected to peak at 76,2% of GDP. Opposition parties argue that the VAT hike will burden struggling households. “We understand the impact on citizens, which is why basic food items stay VAT-free,” Godongwana reassured.
Public reaction has been mixed. Economist scholar Khakha Totata said: “I don’t see them taxing corporate entities. The reasons are unknown, to avoid discouraging investors. From a micro-economic perspective this Budget is a conservative one. The country is running at a deficit, but nothing here is alarming or surprising besides the tax increases. It’s not a Budget that addresses socio-economic issues like unemployment; it’s just consecutive budgeting.”
It now faces parliamentary scrutiny, with potential amendments ahead, for “resilience and growth,” Godongwana concluded.
