By Kwanele Dhladhla
Minister of Finance Neal Rijkenberg holds the view that the South African Parliament on Wednesday passed the budget, which entails a 0.5 per cent VAT hike, due to expenditure pressures.
he VAT hike will be 1% over a two-financial-year period. This was the reaction of Rijkenberg soon after it was announced that the budget was passed after 194 Members of Parliament (MPs) voted for its approval against 182.
SABC News recently reported that most political parties in Parliament had rejected Finance Minister Enoch Godongwana’s 2025/2026 budget, mainly opposing the 0.5 per cent Value Added Tax (VAT) increase.
The rejection was reported to be primarily based on Godongwana’s budget which, apart from the VAT increase, also proposed a hefty tax increase on alcoholic beverages and tobacco-related products. This, he said, was to raise E28 billion of much-needed revenue.
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“I thought it (VAT increase) would go through due to the expenditure pressure. I will be tabling our request to follow suit in the next Parliament sitting,” said Rijkenberg.
The minister on Monday disclosed that Cabinet had already approved the bill which seeks to increase VAT to align with South Africa.
SABC News said while African National Congress (ANC) Chairperson Gwede Mantashe supported the budget, United Democratic Movement (UDM) Chief Whip Nqabayomzi Kwankwa and African Christian Democratic Party (ACDP) MP Steve Swart voiced their opposition.
“The budget talks to the issues of our people. I heard the party that says this budget is not pro-growth.
And I ask a simple question: how can you spend money on education, health infrastructure, and social grants and say it’s against growth? We are effectively paying more tax to the fiscus.
One of the issues that we are concerned about is how do you budget for a VAT over two years and the plan is intended to grow the South African economy,” SABC reported.
Swart was quoted to have added, “It means there is no confidence in the plan that is being tabled here because the minister is making several projections around economic growth and also financing SARS, which is very important.
We do not support the VAT increase of one per cent over two years. We believe there are other ways of saving money and collecting the revenue that is due to SARS.
It’s E800 billion that is due to SARS.”
Rijkenberg announced that Eswatini would expand its list of zero-rated goods to cushion consumers.
He explained that the removal of VAT from these products would result in a price reduction of 15 per cent, making them more affordable for consumers.
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The minister said this would particularly help cushion the poor, should South Africa’s proposed VAT increase take effect.
Rijkenberg noted that due to the country’s economic ties with its larger neighbour, Eswatini would have no choice but to follow suit to avoid complications at the border.
He explained that 70 per cent of goods and services were imported from South Africa and similarly with exports, 70 per cent goes to South Africa as well.
“If South Africa goes ahead with the VAT increase, we will expand our zero-rated bracket to ensure Emaswati, especially the poor, do not bear the full impact,” he said.
The minister added that the government had identified several key items that would be moved from being taxed to the zero-rated category.
However, in an effort to balance tax revenues, Rijkenberg announced that condensed milk, which was currently not taxed, would now attract VAT.
