The proposed increase, which was due to come into effect on May 1, would have pushed the tax from 15% to 15.5%.

Finance Minister Enoch Godongwana communicated the decision in a letter addressed to National Assembly Speaker Thoko Didiza, effectively confirming that the VAT rate will remain unchanged, for now.

The controversial hike was initially included in the Fiscal Framework and Revenue Proposals, narrowly passed by the National Assembly earlier this month. Opposition parties, including ActionSA, the Democratic Alliance (DA), and the Economic Freedom Fighters (EFF), raised serious concerns over the burden it would place on ordinary South Africans already grappling with a rising cost of living.

ActionSA had recommended that the National Treasury be given 30 days to explore alternative ways to boost revenue without resorting to tax increases. At the same time, the DA and EFF took the matter to the Western Cape High Court, where a decision has yet to be handed down.

In response to the ongoing debate and legal challenges,  Godongwana has pledged to present updated versions of the Appropriation Bill and the Division of Revenue Bill in the coming weeks, signalling a new approach to balancing the country’s books.

--ChannelAfrica--