No VAT Hike Needed in South Africa, Says Dawie Roodt, as SARS Beats Revenue Targets

In a recent interview with Biznews, Roodt argued that a planned 0.5 percentage point VAT increase — set to take effect on 1 May 2025 — is unnecessary, thanks to stronger-than-expected tax revenues.

His comments come as South Africa’s High Court considers a legal challenge by the Democratic Alliance (DA) and Economic Freedom Fighters (EFF) aimed at stopping the proposed VAT hike. Judgment is expected by 29 April 2025.

“Half a percentage point increase will raise around R10 billion. That means the state has the money. We don’t need to increase VAT,” said Roodt.

SARS Beats the Target

The South African Revenue Service (SARS) reported on 1 April 2025 that it had collected a record R2.303 trillion in gross revenue for the 2024/25 fiscal year — 6.9% higher year-on-year. After refunds of R447.7 billion, the net revenue stood at R1.855 trillion — nearly R8.8 billion above the revised estimate.

That windfall, Roodt argues, closes the fiscal gap that the VAT hike was supposed to fill.

Government’s Position: Borrowing or Bust

Finance Minister Enoch Godongwana, however, remains firm. He has warned that scrapping the VAT hike could result in a budget shortfall that would need to be covered through borrowing, risking the country’s fiscal credibility.

“Eliminating the VAT increase without an alternative would weaken fiscal discipline and impose long-term costs,” Godongwana has previously said.

Opposition Pushback

Opposition parties have been vocal in their resistance.

“We oppose a bullying budget that will lead to more young people losing hope,” said DA finance spokesman Mark Burke during Tuesday’s court proceedings.

The EFF also joined the legal fight, citing the regressive impact of VAT hikes on low-income households and growing investor concerns about political and economic uncertainty in the wake of South Africa’s government of national unity.

What’s Next?

With Roodt’s argument backed by solid SARS revenue data, and the High Court’s ruling expected by the end of April, the VAT debate has become a litmus test for how the government balances growth, fairness, and fiscal prudence.

Whether the VAT increase goes ahead or not, the outcome will reshape South Africa’s short-term economic path — and directly affect millions of households and businesses.

{Source BusinessTech}

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