MBABANE (24 APRIL 2025): Minister of Finance Neal Rijkenberg has been caught off-side, again. The Minister who was scheduled to ask Parliament to increase the VAT rate by 0.5% this afternoon, will be forced to reconsider.
Last night, his South African counterpart, Enock Godongwane caved in and withdrew plans to increase the highly unpopular VAT rate increase.
Just after midnight, the South African Treasury issued a statement that the minister “will shortly introduce the Rates and Monetary Amounts and the Amendment of Revenue Laws Bill [Rates Bill], which proposes to maintain the Vat rate at 15% from 1 May 2025, instead of the proposed increase to Vat announced in the budget in March.
“The decision to forgo the increase follows extensive consultations with political parties, and careful consideration of the recommendations of the parliamentary committees,” National Treasury noted on Thursday.
“By not increasing VAT, estimated revenue will fall short by around R75 billion over the medium term. As a result, the Minister of Finance has written to the Speaker of the National Assembly to indicate that he is withdrawing the Appropriation Bill and the Division of Revenue Bill, in order to propose expenditure adjustments to cover this shortfall in revenue,” National Treasury added.
Eswatini which is tied to South Africa through the Rand Monetary Area and the Southern Africa Customs Union, is obliged to maintain VAT parity with South Africa to ensure smooth transit of taxable items between the two countries’ borders.
Traditionally, the Kingdom’s Minister of Finance takes precautions to not pre-empt the South Africa fiscal position by delaying the budget presentation until that of South Africa.
This year however, Rijkenberg presented a E32.6 billion revenue estimate, based on among others on the 15% VAT rate. However his South African counterpart subsequently introduced a 0.5% increase which was approved by the highly fractured SA Parliament.
This forced Rijkenberg to also adjust his VAT by a 0.5% upward notch.
In South Africa the VAT increase proved highly unpopular, charging a firestorm of opposition. The Democratic Alliance and the EFF sued Godongwane to reverse the increase at the Western Cape High Court.
The South Africa reversal comes as the minister of finance was due to table a Bill in Parliament this afternoon, asking for the VAT increase. According to the order paper issued by the Clerk of Parliament Bennedict Xaba, the minister of finance is one of three ministers to table bills this afternoon.
Jm/today/24.04.2025
