Cape Times 2025-02-20

Godongwana declines to comment whether proposed 2% VAT increase triggered stalemate in GNU The unprecedented postponement of the tabling of the Budget Review before Parliament by Finance Minister Enoch Godongwana over disagreements about tax increases has been seen as failure of economic growth policies more than the strengthening of the Government of National Unity (GNU). Godongwana was scheduled to table the 2025 Budget Review and the Division of Revenue Bill before Parliament on Wednesday, but this has since been postponed to March 12 as GNU parties disagreed with the proposed VAT increase. The National Treasury was going to table a proposal for a 2 percentage point increase in VAT, from 15% to 17%, in a bid to raise at least R58 billion over the 2025 fiscal year as the government…

Cabinet’s future talks about a 2% increase in VAT, a proposal by the government that was so politically sensitive it caused the National Budget to be postponed, cannot take place without considering what it is going to be replaced with, Finance Minister Enoch Godongwana said. Speaking at a briefing after the postponement of the Budget on Wednesday until March 12, he said that given the funding and fiscal challenges facing the country, the Cabinet will need to decide how the country is going to come up with the additional funding required, either through increased borrowings, for which there was little scope, further government spending cuts, or increased taxation. The Democratic Alliance (DA) on Wednesday took the lead in voicing its opposition to the proposed 2% increase in VAT that was…

What threw the cat among the pigeons on Wednesday was the government proposed a surprise 2% increase in VAT to help pay for its increased spending plans. This proposal led to the unprecedented postponement of the Budget to March as this measure is being reconsidered. This increase would have further impoverish many financially struggling consumers has drawn the ire of Government of National Unity party members such as the DA, which said it will reject proposals to increase taxes. What was being proposed: Finance Minister Enoch Godongwana said in a briefing the government realises that the VAT increase, along with some other proposals in the Budget, is politically sensitive, that it will have a big impact on consumers, and he anticipates there will be substantial negotiations on the proposals, once…

South Africa is making headway to be removed from the Financial Action Task Force (FATF) greylist, the Companies Intellectual Property Commission (CIPC) told the Portfolio Committee on Trade and Industry on Wednesday. South Africa was grey listed in in February 2023 and has been focused on implementing reforms to get of the list. CIPC said it has resolved two key deficiencies related to the Beneficial Ownership Register (BOR), ensuring that competent authorities have timely access to prosecute cases involving money laundering and terrorism financing, as well as the capacity to impose remedial sanctions. Greylisting means that a country is under increased monitoring by the FATF due to certain deficiencies in its anti-money laundering and combating the financing of terrorism and proliferation financing framework. Greylisting typically impacts an economy through various…

South Africa has reached a critical tipping point, warned Professor Andre Thomashausen, a renowned expert in international law from the University of South Africa, following the postponement of Finance Minister Enoch Godongwana's Budget speech, originally scheduled for Wednesday, now rescheduled to March. "If a Budget can no longer be agreed upon because public spending continues to spiral, the country will face another 20% drop in GDP, in addition to the same drop already since 2000. Ideology continues to be the reason for essential concessions being declared non-negotiable," he said. Experts have cited a proposed 2% VAT increase as a possible reason for disagreement between the Government of National Unity (GNU) and the postponement of the Budget speech. Professor Bonke Dumisa, an independent economic analyst, expressed his disappointment, saying, "It's really…

The Budget has been postponed to March 12 after a deadlock within the Government of National Unity coalition partners over VAT. This was part of the proposed Budget that is now under review: The government will dip into the contingency reserve to meet the financial demands borne by the increase in the public-sector wage bill over the next three years. This is the second consecutive year that the National Treasury taps the contingency reserve after drawing down R150 billion last year from the country’s Gold and Foreign Exchange Contingency Reserve (GFECRA) account to keep borrowing and debt service costs low in the medium-term. Finance Minister Enoch Godongwana, during his Budget Speech in Parliament on Wednesday, allocated R23.4bn in the medium-term to implement a higher-than-anticipated above-inflation wage agreement with nearly 1.8…