THERE was some relief for South Africans on Thursday, 24 April 2025 when it was announced that the proposed 0.5% increase in Value Added Tax (VAT) would be withdrawn.

The VAT increase was to be implemented from 1 May. According to the National Treasury, the decision to withdraw the increase follows “extensive consultations with political parties and careful consideration of the recommendations of the parliamentary committees”.

Treasury said the withdrawal is expected to create an estimated revenue shortfall of R75 billion over the medium term.

Finance Minister Enoch Godongwana will withdraw when he introduces the Rates and Monetary Amounts and the Amendment of Revenue Laws Bill (Rates Bill) to Parliament.

“The Minister has written to the Speaker of the National Assembly to indicate that he is withdrawing the Appropriation Bill and the Division of Revenue Bill, in order to propose expenditure adjustments to cover this shortfall in revenue. 

“Parliament will be requested to adjust expenditure in a manner that ensures that the loss of revenue does not harm South Africa’s fiscal sustainability.”

The Western Cape Government has welcomed the withdrawal of the VAT increase.

“Our position on the matter has always been clear: We have significant budget pressures, especially in health, education and social services. However, funding should come from fast-tracking economic growth reforms, cutting wasteful expenditure and reprioritising spending – not an increase in VAT,” said Western Cape Minister of Finance, Deidré Baartman. Sources: SAnews.gov.za/westerncape.gov.za