---
title: "VAT to be hiked by one percentage point over two years"
description: "Minister of Finance, Enoch Godongwana, delivered the Budget Speech announcing a contentious VAT increase of 1 percentage point over two years. Several GNU partners have rejected the Budget, signalling stormy waters ahead as the matter now goes to Parliament, where it will be debated in the committees, and finally, the National Assembly."
type: "NewsArticle"
publisher: "Daily Maverick"
site: "https://www.dailymaverick.co.za"
section: "CATCH UP"
author: "Daily Maverick"
author_url: "https://www.dailymaverick.co.za/author/dailymaverick/"
canonical_url: "https://www.dailymaverick.co.za/article/2025-03-12-budget-speech-2025-live-updates/"
published: "2025-03-12T11:03:47"
updated: "2025-03-12T17:29:13"
lang: "en-ZA"
word_count: 147
---

# VAT to be hiked by one percentage point over two years

> Minister of Finance, Enoch Godongwana, delivered the Budget Speech announcing a contentious VAT increase of 1 percentage point over two years. Several GNU partners have rejected the Budget, signalling stormy waters ahead as the matter now goes to Parliament, where it will be debated in the committees, and finally, the National Assembly.

By Daily Maverick · Published 12 March 2025, 13:03 SAST · Updated 12 March 2025, 19:29 SAST

## Key points
- As Godongwana tiptoes through the political minefield of coalition appeasement, experts are waving red flags at VAT hikes, insisting that South Africa's fiscal crisis needs more than just a band-aid budget.
- Godongwana navigates a challenging landscape, seeking to balance coalition partner demands.
- Experts warn against a VAT hike, proposing alternative solutions to South Africa's fiscal woes.
- The Presidency assures that the upcoming SA Budget 2025 will receive unanimous backing from all GNU parties.
- Stay informed with the latest pre-Budget insights and analyses from the Daily Maverick.

## Content

### Highlights from the Budget speech:

- The finance minister proposed a phased [VAT increase](https://www.dailymaverick.co.za/article/2025-03-12-budget-2025-how-the-government-is-extracting-more-while-providing-less-for-citizens/): an initial 0.5 percentage point rise from the current 15% on 1 May 2025, followed by another 0.5 percentage point increase in 2026.
- [Old age and disability grants](https://www.dailymaverick.co.za/article/2025-03-12-social-grant-allocations-lower-than-the-pre-budget/) will increase by R130, child support grants by R30 and foster care grants by R70.
- The SRD grant is extended until March 2026 and will be restructured into a permanent basic income support mechanism.
- Excise duties on alcoholic beverages and tobacco products will [increase from 4.75 % to 6.75%](https://www.dailymaverick.co.za/article/2025-03-12-sin-taxes-feeling-good-has-never-hit-your-pocket-this-badly/), effective immediately. Your packet of 20’s will now cost you R1.04 more.
- Eskom debt relief has been revised down to R50-billion from R70-billion, saving the taxpayer R20-billion.
- Prasa gets R19.2-billion for rail infrastructure upgrades.
- There will be no increase in sugar tax this year.
- [Read the full speech here](https://www.dailymaverick.co.za/article/2025-03-12-read-in-full-godongwanas-budget-speech/).

*[Live blog — follow updates on the original page](https://www.dailymaverick.co.za/article/2025-03-12-budget-speech-2025-live-updates/)*