2025 Budget Passed Amid Tension
South Africa’s 2025 Budget has been passed by Parliament—but only just—and the political fallout could have big implications for us. The National Assembly adopted the Budget framework by a narrow vote of 194 to 182, with no abstentions. The ANC, backed by most of its Government of National Unity (GNU) partners and joined by ActionSA and Build One South Africa (BOSA), secured enough support to pass the budget, despite strong resistance from the Democratic Alliance (DA), EFF, MK Party, and others.
What’s in the Budget That Matters to Accountants?
A 1% VAT increase, with the first 0.5% hike set to take effect in May 2025
No inflation adjustment to personal income tax brackets, potentially pushing more people into higher tax rates (“bracket creep”).
These measures were adopted without formal amendments. While the Standing Committee on Finance suggested revisiting these issues later, their recommendations carry no legal weight.
Legal Battle Brewing: DA Goes to Court
The DA has announced that it will challenge the budget in court, particularly targeting the VAT hike, arguing that the way Parliament processed the Budget was procedurally flawed and unconstitutional. Key points of the DA’s is planning to challenge include:
The Finance Committee meeting on 1 April did not follow Parliamentary rules. It allegedly finalized the Fiscal Framework after the meeting adjourned.
The Budget was adopted without Parliament properly debating or approving specific revenue and spending measures announced by the Finance Minister.
Steenhuisen criticised ActionSA and other GNU allies for enabling a tax hike he says will make life more expensive for ordinary South Africans, while the DA argues that it tried to push for growth-focused amendments instead.
Political Fallout: Is the GNU Cracking?
The vote also deepens rifts within the GNU. The DA’s decision to oppose the Budget raises serious questions about its future in the coalition. Presidency spokesperson Vincent Magwenya told the media:
“How do they remain part of a government whose Budget they opposed? How can DA Ministers run programmes on a Budget they opposed?”
When asked what President Cyril Ramaphosa plans to do next, Magwenya said the President “will take his time” and “never rushes into anything.”
Meanwhile, the DA is moving fast, with its court challenge expected to begin soon.
What This Means for Us
The Budget and all its tax measures—including the VAT increase—are set to proceed as tabled. Can the legal challenge delay the implementation? We can only wait and see. In the meantime we should prepare businesses for the upcoming changes but also watch for developments from the courts in the weeks ahead. Read more on how to get ready for the VAT rate change in our previous article VAT Rate is Going Up! Are You Ready for the Changes? and stay tuned for further updates.
