Leaked copies of Finance Minister Enoch Godongwana’s Budget Speech revealed that the National Treasury had initially proposed a two percent increase in the Value Added Tax (VAT). The additional revenue was intended to fund salary increases for public sector employees, retain essential workers such as teachers and doctors, and expand early childhood development programmes. However, this proposal was met with resistance during an urgent Cabinet meeting, leading to the postponement of the Budget Speech for the first time since South Africa’s democratic transition in 1994.
Had the increase been approved, the VAT rate would have risen from 15 percent to 17 percent, significantly impacting the cost of goods and services. The leaked speech indicated that Treasury viewed this as a necessary measure to address pressing financial obligations, including restoring the country’s struggling railway network.
“After careful analysis of the trade-offs, we have chosen the most responsible path forward. We propose to raise the VAT rate by 2 percentage points to 17 percent – a necessary step that will enable us to:
Fund public sector wage increases for our civil servants
Expand early childhood development opportunities for our children
Retain the teachers, doctors, and essential frontline workers that serve our communities
Revitalise our commuter rail system to better serve working-class families
Provide above-inflation increases to social grants for our most vulnerable”
Despite Treasury’s rationale, ministers from the coalition Government of National Unity (GNU) – including representatives from the Democratic Alliance (DA), Patriotic Alliance (PA), Inkatha Freedom Party (IFP), Freedom Front Plus (FF+), Pan Africanist Congress (PAC), and others – could not reach a consensus. The dispute resulted in an unprecedented decision to postpone the Budget Speech, with the new date set for 12 March 2025.
Government spokesperson Khumbudzo Ntshavheni confirmed that Cabinet required additional time to deliberate on the proposed measures. Addressing the media, Godongwana acknowledged the fiscal constraints facing the country and underscored the need to find sustainable solutions. However, he clarified that the VAT increase was not the sole issue under discussion.
“What we are grappling with is not necessarily the matter of 2%, given the challenges we face as a country, how do we fund them? Do we continue cutting expenditure? We need to find ways of funding our priorities.”
Godongwana stressed that while he was open to feedback on the Budget, the final decision rested with President Cyril Ramaphosa, not those protesting outside Parliament or dissenting within Cabinet. His comments reflected the broader tensions within the GNU, as some members sought to distance themselves from the contentious tax hike.
When asked about divisions within the coalition, Ntshavheni defended the decision to delay the Budget, arguing that Treasury bore the responsibility of ensuring a balanced fiscal approach. She maintained that the postponement resulted from collective GNU deliberations rather than being an initiative of the African National Congress (ANC) alone.
Opposition to the delay came from several political parties, including the Economic Freedom Fighters (EFF), the uMkhonto weSizwe (MK) Party, the United Democratic Movement (UDM), and the African Transformation Movement (ATM). These parties argued that the Budget should be presented as scheduled, accusing the GNU of engaging in political maneuvering at the expense of urgent economic matters.
EFF leader Julius Malema criticised the delay, stating that the GNU was allowing internal party politics to dictate national decision-making.
“The Government of National Unity is now being relegated to petty party politics. There are no different parties in the executive—there is one executive, and the Budget should proceed and be debated accordingly.”
MK Party chief whip Mzwanele Manyi echoed this sentiment, demanding that the Budget be delivered without further delays. Similarly, UDM Member of Parliament Nqabayomzi Nkwankwa claimed his party had not been consulted about the postponement and insisted that the process should move forward as planned. ATM leader Vuyo Zungula opposed the deferral, arguing that the reasoning behind it was flawed.
“The notion of assuring the markets is problematic, as the House belongs to the people of South Africa, rather than capital.”
Zungula further criticised the decision, saying that indefinite postponements of critical economic policies were unacceptable.
Conversely, parties within the GNU – including the DA, PA, IFP, FF+, Good, Al Jama-ah, and the PAC – supported the delay. The DA welcomed the decision, framing it as a victory for South African citizens who would have been adversely affected by the proposed tax increase.
“The postponement of the Minister of Finance’s 2025/26 National Budget Speech today is a victory for the people of South Africa, as it prevents the implementation of a 2% VAT increase that would have broken the back of our economy.
The postponement resulted from the DA’s resolute opposition to the ANC’s plan to hike VAT at a time when millions of South Africans are already suffering under a cost-of-living crisis.”
DA leader John Steenhuisen reaffirmed that the party opposed any move that would place further financial strain on already struggling households. Good party leader Patricia de Lille confirmed that all GNU members had agreed on the need for more deliberations. Meanwhile, PA leader Gayton McKenzie praised the ANC’s willingness to reconsider its approach, describing it as a sign of humility.
