The Minister of Finance, Enoch Godongwana has reversed the contentious proposed VAT increase by 0.5 percentage points.
This was revealed by the Treasury through a statement on Wednesday overnight, ahead of the VAT hike that was scheduled to kick in from the 1st of May.
“The decision to forgo the increase follows extensive consultations with political parties, and careful consideration of the recommendations of the parliamentary committees,” read a statement from Treasury.
In addition, Godongwana has written to the National Assembly Speaker, Thoko Didiza, to notify parliament about withdrawing the Appropriation and Division of Revenue Bill, to propose expenditure adjustments to cover the estimated R75 billion shortfalls in revenue.
The decision to reverse the VAT hike was welcomed by several political parties including the ANC, ActionSA, BOSA and Al Jama-ah amongst others.
The DA and EFF had already approached the Western Cape High Court, to interdict the VAT increase.
Furthermore, Treasury said it will continue to consider other proposals and suggestions as potential amendments to generate revenue, especially as the country faces fiscal constraints.
