Finance Minister Enoch Godonwana has abolished the planned increase in value-added tax (VAT) of 0.5%.
The decision followed extensive consultations with political parties and carefully considered recommendations from the parliamentary committee. This move has estimated a revenue shortfall of approximately R75 billion over the medium term.
Godongwana informed the Scocodiediza speakers of the National Assembly of his decision to withdraw the plan. Congress was expected to adjust spending to maintain fiscal sustainability. The move also meant withdrawing previously proposed measures to mitigate low-income households against the impact of VAT hiking.
A revised budget without a rise in VAT was to be introduced, but the original proposal was intended to restore funding for frontline services facing cuts.
