Parliament confirms VAT increase suspended, new budget to be tabled by Finance Minister
Parliament confirms the suspension of the VAT increase following a court-endorsed settlement. A new budget will be tabled soon by Minister of Finance Enoch Godongwana, with legal certainty and fiscal stability prioritised.
Image: File
Parliament has confirmed that the planned Value Added Tax (VAT) increase, announced earlier this month, will no longer proceed.
This follows an out-of-court settlement reached on Sunday, April 27, 2025, which was made an order of the Western Cape High Court.
The agreement suspends the VAT increase and sets aside the 2025 Fiscal Framework, clearing the way for Finance Minister Enoch Godongwana to present a new National Budget.
Parliamentary spokesperson Moloto Mothapo said the resolution demonstrates South Africa's commitment to legal certainty and constitutional governance.
'By avoiding prolonged litigation, Parliament has helped ensure legal certainty, fiscal stability, and the continued delivery of essential public services,' said Mothapo.
The court order halts the VAT hikes previously scheduled to begin on May 1, 2025. These increases are now suspended until new legislation is passed or a final court decision is made. Additionally, resolutions adopted by both Houses on April 2 approving the 2025 Fiscal Framework have been formally set aside.
Although the matter was resolved through an out-of-court agreement, it was made legally binding by the court to prevent the VAT increase from taking effect automatically due to legislative time constraints.
'The court order thus ensured legal certainty and prevented the previously announced VAT increase from automatically taking effect on 1 May,' Parliament explained.
The issue arose when the Democratic Alliance (DA) and the Economic Freedom Fighters (EFF) challenged the VAT hike. The Finance Minister subsequently withdrew his opposition, opening the door for a negotiated resolution. While the settlement was voluntary, it includes a costs order, said Parliament.
'The inclusion of a costs order was a necessary component of securing the settlement,' Parliament said, clarifying that it was not punitive but intended to cover substantial legal expenses incurred.
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