The Minister of Finance has announced that VAT will stay at 15% and will not increase on 1 May 2025 as originally planned in the Budget speech delivered in March.

This decision was made after talks with political parties and feedback from Parliament, and is aimed at easing pressure on consumers, especially lower-income households.

However, keeping VAT at 15% means government will now collect about R75 billion less in revenue over the next few years.

To deal with this shortfall, the Minister has decided to withdraw the Appropriation Bill and the Division of Revenue Bill — two important bills that outline how government plans to spend money. These will be revised to make sure South Africa stays on track financially.

This also means that some planned support measures for low-income households, which were meant to soften the blow of a VAT increase, will no longer go ahead. Government departments will now need to adjust their budgets to make up the difference.

Any extra revenue collected by SARS may be used to help cover these changes.

The Finance Minister is expected to introduce the revised budget bills in the next few weeks.

Keep listening to HOT 102.7FM for updates and expert analysis on what this means for you and your household.