Mbalula Says VAT Could Be Reduced When South Africa’s Economy Improves

ANC Secretary-General Fikile Mbalula has revealed that the recent VAT increase has caused tension between the ANC and its partners in the Government of National Unity (GNU). While expressing confidence in reaching a resolution, Mbalula acknowledged that recent discussions have stalled.

VAT Increase and Future Prospects

Effective 1 May, South Africa will implement its fourth VAT hike in history – a 0.5 percentage point increase. However, Mbalula suggested this might not be permanent, stating: “If the country’s economy improves, there may be an opportunity to reduce VAT in the future.”

The ANC leader explained: “Right from the onset when Treasury came up with 2% [VAT hike], we did not agree but we ran out of options… As our economic situation improves, this zero percent intervention is not permanent, it will be withdrawn.”

Negotiations Within the GNU

Mbalula emphasized the need for continued dialogue: “We need to pass the budget for the sake of South Africa, but we must address the concerns raised by our partners. It’s not about concessions but about finding solutions.”

The disagreement stems from Finance Minister Enoch Godongwana’s announcement that VAT would gradually increase to 16% by the 2026/27 fiscal year. Most political parties have rejected the proposed 0.5% increase, despite Mbalula’s assurances that the hike isn’t necessarily permanent.

Public Skepticism and Engagement

While officials suggest the VAT increase could be temporary, many South Africans remain skeptical about future tax policies. The public is invited to share their views on whether VAT might reach 20% before 2029 through comments or WhatsApp messages.

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