VAT increase 'carefully considered' – Mbalula
African National Congress Secretary General Fikile Mbalula says the proposed increase in value-added tax was a carefully considered decision to sustain government revenue.
Finance Minister Enoch Godongwana confirmed on Wednesday that the Treasury wants South Africans to pay more VAT in an effort to raise more revenue.
The tax will increase by half a percentage point in the 2025/26 financial year, followed by another increase the following year.
This will take VAT to 16% by 2026/27.
Briefing the media on the party's response to the budget, Mbalula said the government placed a number of interventions to offset the impact on the poor.
"The ANC recognises the concerns of working-class families, which is why mitigation measures, including an expanded zero-rated VAT basket, real increases in social grants, and fuel levy relief, have been prioritised.
"Unlike opposition parties that are fixated on elite interests, the ANC remains committed to proper economic policies that protect vulnerable households while ensuring sustainable public finances."
He added that the Democratic Alliance had “again shown its anti-transformation agenda” by opposing the progress budget proposal.
"In their desperation, they seek to create an Israeli-Gaza type situation, using the Western Cape as their political salvo, a scenario in which African and coloured people of the province will be treated as subhuman in the land of their birth.
"This is the reason behind their insistence on Cape Town's port being considered, an attempt to carve out an economic enclave where the interests of the privileged are protected at the expense of the majority."
This after the DA made it clear that they were rejecting the proposed budget by Finance Minister Enoch Godongwana.
Party leader John Steenhuisen stated that the party would continue to push for economic growth and job creation instead.
"The DA made it clear to the ANC in the GNU that we would not support any increase in taxes unless those increases were temporary, and the ANC agreed to a series of major reforms that would grow the economy, create jobs, reduce waste and bring down taxes within three years.
"The ANC refused to agree to these measures and instead insisted on two likely permanent VAT increases, which cumulatively will increase VAT by 1% over the next two years. As a consequence, the people of South Africa will be poorer, and the future of the government is at risk.
“The underlying problem is that the ANC has still not accepted the outcome of the general election and cannot bring itself to share power," said Steenhuisen.
Mbalula maintained that the budget is not about figures and allocations but is aimed at economic transformation and reducing inequality.
"The African National Congress welcomed the 2025 budget proposal as a decisive intervention that prioritises job creation, economic growth and service delivery while safeguarding the hard-won gains of our democracy. This budget is not just about figures and allocations.
"It is about the lived experiences of our people, addressing historical injustices and ensuring that economic transformation remains at the centre of governance. It reaffirms the ANC's unwavering commitment to eradicating poverty, reducing inequality and building a better life for all.
"We remain firmly committed to building a developmental state that intervenes decisively in the economy to break the structural barriers of inequality, deepen industrialisation and place South Africa on a sustainable growth trajectory. The budget proposal is an important step in stabilising public finances while sustaining investments in infrastructure, industrialisation and social protection."
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