Budget Speech 2025

Madam Speaker,

There are several persistent spending pressures in health, education, transport and security.

These have to do with the government properly fulfilling its service delivery mandate.

After careful consideration, the government has decided to fund these. Deferring the funding of these sectors further would compromise the government’s ability to meet its constitutional obligations to the people.

To raise the revenue needed, the government proposes to increase the VAT rate by half- apercentage point in 2025/26, and by another half-a-percentage point in the following year.

This will bring the VAT rate to 16 per cent in 2026/27.

Government also proposes no inflationary adjustments to personal income tax brackets, rebates and medical tax credits.

These measures will raise R28 billion in additional revenue in 2025/26 and R14.5 billion in 2026/27.

Madam Speaker, this decision was not made lightly. No Minister of Finance is ever happy to increase taxes.

We are aware of the fact that a lower overall burden of tax can help to increase investment and job creation and also unlock household spending power.

We have, however, had to balance this knowledge against the very real, and pressing, service delivery needs that are vital to our developmental goals and which cannot be further postponed.