Neelam Rahim | neelam@radioislam.co.za

3-minute read
26 April 2025 | 10:30 CAT

Budget Speech 2025: Finance Minister Enoch Godongwana tabled a two-step hike—0.5% in 2025/26 and another 0.5% in 2026/27.

The decision to reverse the planned 0.5% VAT increase has been met with widespread relief across South Africa, following negotiations between several political parties, the National Treasury, and the African National Congress (ANC).

In an interview with Radio Islam International, Funzi Ngobeni, a provincial leader for ActionSA, acknowledged that the party, alongside nine others, engaged with the Treasury and the ruling party to propose alternatives to the VAT hike. “They submitted recommendations together with a fiscal policy proposal that the minister must reconsider the VAT,” Ngobeni explained, crediting ongoing engagements and negotiations for the reversal.

The reversal follows a period of public concern as notices from banks and service providers had already warned customers about the expected VAT increase from May 1. Ngobeni mentioned that these organizations would now need to update customers on the decision not to proceed with the hike.

Ngobeni emphasized that the outcome was a collective effort, stating, “It would not be honest to say it was only ActionSA. Nine parties worked together to convince the ANC that the 0.5% increase was not the right approach.” He also welcomed the ANC’s willingness to reconsider its initial stance after reviewing alternative proposals provided by opposition parties.

Regarding the future political landscape, Ngobeni said ActionSA remains open to collaborating with other parties within the Government of National Unity (GNU) if approached. He cited the party’s current cooperation with various parties in Tshwane, where work is being done to meet the expectations of residents.

“There is still a lot of work to be done, but we are on the right track,” he said, adding that if given the opportunity at the national level, ActionSA believes it could contribute positively across departments such as Home Affairs and Police.

The VAT reversal is seen as a significant development at a time when South Africans continue to face financial strain amid broader economic challenges.

Listen to the full interview on The Daily Round-Up with Moulana Junaid Kharsany and Funzi Ngobeni here.