Because of disputes over whether or not to increase value added tax (VAT), South Africa is headed for its third budget this year.
The first budget, presented in February, proposed to raise VAT by two percentage points, from 15% to 17%, to fund government spending. That proposal was voted down in parliament.
The second budget, in March, proposed increasing VAT to 15.5% this year, and to 16% in 2026. That was withdrawn before it was debated, as it once again lacked political support.
Now the Treasury says it is working on a new budget, to be presented by the Minister of Finance “within the next few weeks”. It would set out how the government will have to adjust spending to cover the shortfall in revenue caused by the loss of around R75 billion from the cancelled VAT hike.
South Africans will be hoping that political parties can agree on a spending framework that makes this the third and last budget for 2025.
