Finance Minister Enoch Godongwana says increases may not be the ideal measure but it is an attempt to bring much needed improvement in the delivery of frontline services like health and education.

Treasury appeared before the four finance committees of Parliament where MPs could analyse this week’s budget.

On Wednesday, Godongwana announced a 0.5 percentage point increase in VAT.

This is after the budget tabling was postponed last month, due to disagreements within the Government of National Unity partners over a proposed 2%  VAT increase.

Godongwana told MPs that the VAT increase is necessitated by the need to improve social services, such as health for the poor.

“The health budget had been so eroded; the accruals amount to R21 billion. Now, if all of us care about the poor, whose services had been eroded, as much as we have different views on matters, we keep our eyes on the ball.”

INFOGRAPHIC | Consolidated Expenditure #BudgetSpeech2025 pic.twitter.com/KPOsqY5twE

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VIDEO| Finance Minister Enoch Godongwana appears before the Parliament committees:

Godongwana added that due to austerity measures in frontline departments over a number of years, matters have reached a stage where serious intervention is needed and hence, the implementation of a VAT increase is necessary.

“We may disagree on methodologies and other things colleagues, but we can’t disagree on substantive issues. Our defence force’s lack of funding became clear during the DRC problem, we can’t continue in that way.”