ActionSA unequivocally rejects the proposed 1 percentage point increase in VAT—0.5 percentage points this year and 0.5 next year—as well as the hidden tax increase caused by the failure to adjust personal income tax brackets for inflation. These measures will quietly extract more from hardworking South Africans while state corruption, mismanagement, and waste continue unchecked under the coalition government.
While VAT may be the most efficient of the major taxes, it disproportionately harms the poor. At the same time, the refusal to adjust tax brackets for inflation amounts to a stealth tax—pushing ordinary workers into higher tax brackets without an actual salary increase. The result? South Africans are expected to pay an additional R18 billion simply to bankroll government waste, failed policies, and corruption.
The government claims these tax hikes will fund above-inflation increases in social grants, VAT zero-rated food items, and fuel levy relief. Yet these measures should be covered by cutting wasteful spending—including redundant Deputy Minister positions and failing government programs—rather than squeezing more from taxpayers. The truth is that ordinary citizens are being forced to pay for government failures, while those responsible for looting the state face no consequences.
ActionSA has long called for proper funding of SARS, a demand that has gained wider recognition. South Africa faces a tax gap of R450 billion annually, with an additional R400 billion in uncollected revenue. That’s R850 billion left on the table. To this end, we welcome the additional R3.5 billion allocated in the current financial year and an extra R4 billion over the medium term, as announced in the Budget Speech. This increase will help SARS collect more revenue and combat illicit trade—a victory for the people of South Africa.
However, the broader economic outlook remains deeply concerning. GDP growth for 2024 has been revised downward to a mere 0.8%, compared to 4.2% in other emerging markets and in Sub-Saharan Africa. The government projects 1.9% growth for 2025, but without meaningful economic reforms, this remains nothing more than a pipe dream.
Despite this grim reality, National Treasury has failed to rein in spending, running a 5% budget deficit and expecting citizens to foot the bill. The government now spends 22 cents of every tax rand on debt servicing—compared to just 8 cents in comparable economies. Instead of fixing this, it demands more from taxpayers while allowing corruption to thrive.
The collapse of ArcelorMittal SA’s long steel business—jeopardizing up to 100,000 jobs—is the latest example of the ANC’s failed industrial policies. The company cites prolonged weak economic conditions, failing infrastructure, and unsustainable competition from low-cost imports as reasons for its closure—challenges that extend across the economy. In 2024, the agriculture sector contracted by 15.5%, construction by 6.2%, and manufacturing by 0.3%, raising the question: which industry will collapse next?
Furthermore, the BBBEE framework—once meant to redress apartheid-era exclusion—has been hijacked by ANC cronies. Instead of broad-based empowerment, it has become a vehicle for elite enrichment, corruption, nepotism, and cadre deployment while failing to uplift the majority of black South Africans.
Adding to the economic crisis is the ANC’s destructive foreign policy, which alienates key trading partners. Instead of fostering growth, the government’s diplomatic blunders actively harm the economy, costing South Africans jobs and investment.
The real issue is not a lack of funds—it’s the reckless waste and looting of public money. When I asked Auditor-General Tsakani Maluleke what one action would improve accountability, her response was clear: put corrupt officials in orange overalls. Yet this Budget fails to allocate funds for serious prosecutions. If South Africans do not see meaningful action against corruption, they should prepare for another year of empty promises and continued inaction from the ruling coalition.
ActionSA Rejects Stealth Tax and VAT Hikes, Welcomes Additional SARS Funding
ActionSA unequivocally rejects the proposed 1 percentage point increase in VAT—0.5 percentage points this year and 0.5 next year—as well as the hidden tax increase caused by the failure to adjust personal income tax brackets for inflation. These measures will quietly extract more from hardworking South Africans while state corruption, mismanagement, and waste continue unchecked under the coalition government.
While VAT may be the most efficient of the major taxes, it disproportionately harms the poor. At the same time, the refusal to adjust tax brackets for inflation amounts to a stealth tax—pushing ordinary workers into higher tax brackets without an actual salary increase. The result? South Africans are expected to pay an additional R18 billion simply to bankroll government waste, failed policies, and corruption.
The government claims these tax hikes will fund above-inflation increases in social grants, VAT zero-rated food items, and fuel levy relief. Yet these measures should be covered by cutting wasteful spending—including redundant Deputy Minister positions and failing government programs—rather than squeezing more from taxpayers. The truth is that ordinary citizens are being forced to pay for government failures, while those responsible for looting the state face no consequences.
ActionSA has long called for proper funding of SARS, a demand that has gained wider recognition. South Africa faces a tax gap of R450 billion annually, with an additional R400 billion in uncollected revenue. That’s R850 billion left on the table. To this end, we welcome the additional R3.5 billion allocated in the current financial year and an extra R4 billion over the medium term, as announced in the Budget Speech. This increase will help SARS collect more revenue and combat illicit trade—a victory for the people of South Africa.
However, the broader economic outlook remains deeply concerning. GDP growth for 2024 has been revised downward to a mere 0.8%, compared to 4.2% in other emerging markets and in Sub-Saharan Africa. The government projects 1.9% growth for 2025, but without meaningful economic reforms, this remains nothing more than a pipe dream.
Despite this grim reality, National Treasury has failed to rein in spending, running a 5% budget deficit and expecting citizens to foot the bill. The government now spends 22 cents of every tax rand on debt servicing—compared to just 8 cents in comparable economies. Instead of fixing this, it demands more from taxpayers while allowing corruption to thrive.
The collapse of ArcelorMittal SA’s long steel business—jeopardizing up to 100,000 jobs—is the latest example of the ANC’s failed industrial policies. The company cites prolonged weak economic conditions, failing infrastructure, and unsustainable competition from low-cost imports as reasons for its closure—challenges that extend across the economy. In 2024, the agriculture sector contracted by 15.5%, construction by 6.2%, and manufacturing by 0.3%, raising the question: which industry will collapse next?
Furthermore, the BBBEE framework—once meant to redress apartheid-era exclusion—has been hijacked by ANC cronies. Instead of broad-based empowerment, it has become a vehicle for elite enrichment, corruption, nepotism, and cadre deployment while failing to uplift the majority of black South Africans.
Adding to the economic crisis is the ANC’s destructive foreign policy, which alienates key trading partners. Instead of fostering growth, the government’s diplomatic blunders actively harm the economy, costing South Africans jobs and investment.
The real issue is not a lack of funds—it’s the reckless waste and looting of public money. When I asked Auditor-General Tsakani Maluleke what one action would improve accountability, her response was clear: put corrupt officials in orange overalls. Yet this Budget fails to allocate funds for serious prosecutions. If South Africans do not see meaningful action against corruption, they should prepare for another year of empty promises and continued inaction from the ruling coalition.