Western Cape Government welcomes scrapping of VAT hike

The Western Cape Government welcomes the official reversal of the VAT increases as gazetted by National Finance Minister, Enoch Godongwana, today.

“Our position on the matter has always been clear: We have significant budget pressures, especially in health, education and social services. However, funding should come from fast-tracking economic growth reforms, cutting wasteful expenditure and reprioritising spending - not an increase in VAT,” said Western Cape Minister of Finance, Deidré Baartman.

The reversal does, however, have broader fiscal implications, and the provincial government will be closely monitoring the national process to ensure that the interests of the residents of the Western Cape are protected.

It is important that we get clarity on the Fiscal Framework for provinces as quickly as possible.

Section 29 of the Public Finance Management Act (PFMA) provides a mechanism for continued government expenditure under the current circumstances. As per Section 29(2)(b) of the PFMA, national and provincial governments will spend in terms of their 2024 national and provincial budgets.

For the first four months of the new 2025 financial year, which started on 1 April, we are empowered to spend up to 45% of our total amount appropriated in the previous annual budget (2024); and for each of the following months we are able to spend up to 10% of our total amount appropriated in the previous annual budget.

However, in total, we cannot exceed the full 100% of the total amount of the previous budget.

“We want to assure our residents and provincial government staff that the work of the province will continue uninterrupted. The doors of the Western Cape Government remain open.” Minister Baartman confirmed.

The WCG took a prudent approach with its own 2025 provincial budget and did not table any ‘new’ money attached to the VAT hike, as was announced by Minister Godongwana during his Budget Speech. Therefore, the provincial budget which we tabled in March, was in line with the pre-VAT national Fiscal Framework and did not incorporate the proposed VAT hike.

Today is a victory for the hard-working people of South Africa and the Western Cape. It is a day we will always remember, a day where we can hold up our Constitution and remind the national government – it is not your money. It is the people’s money. And “[w]e, the people of the Western Cape” say NO to VAT increases.

Please see Minister Baartman's speech delivered today during a debate on the VAT matter in the Western Cape Provincial Parliament, here.