Minister announces higher VAT, more healthcare jobs

Finance minister Enoch Godongwana has announced a cautious VAT increase of 0.5% for this year, with another 0.5% hike planned for 2026/27. He said increased health spending will also help retain 9 300 healthcare workers and support public hospitals

The minister of finance, Enoch Godongwana, finally tabled his budget in Parliament today, following a disagreement over a VAT increase in February that led him to postpone his speech. He announced a half percentage VAT increase for this year, less than the initially proposed 2%.

The increase, which will impact products and services, is set to impact the lives of ordinary South Africans, already struggling to make ends meet.

Godongwana said the decision to raise VAT marginally was cautiously considered.

“To raise the revenue needed, the government proposes to increase the VAT rate by half a percentage point in 2025/26, and by another half-a-percentage point in the following year. This will bring the VAT rate to 16% in 2026/27.”

Expanding zero VAT items

To help relieve the burden of households, the minister announced that more items will be included on the zero VAT items list. These will include canned vegetables, dairy liquid blends, and organ meats from sheep, poultry and other animals.

There will also be no changes to the fuel levy.

Employing healthcare workers

In his address, Godongwana referred to challenges facing the health sector. “In the last year alone public sector health system lost close to 9 000 health workers. We did not have the money to retain or replace them even after reprioritising funds budgeted for consumables and medicines,” he said.

Therefore the budget will be allocated as follows:

Health spending will grow from R277 billion in 2024/25 to R329 billion in 2027/28 to provide public health services, including free primary healthcare.
More money will be set aside for salaries and wages: R28.9 billion mainly to keep about 9 300 healthcare workers in hospitals and clinics.
Employment of 800 post-community service doctors, and ensure pharmacies do not run out of medicines.

Social grants will be impacted as follows:

Old age and disability grants will increase by R130 to R2 315 in April.
Child support grant will increase by R30 to R560 per month.
Foster care grant will increase by R70.
The Covid-19 social relief of distress (SRD) grant will be extended by a year to
end March 2026.

ALSO READ: SA faces HIV disaster after US cuts funding

Get the Health For Mzansi newsletter: Your bi-weekly dose of kasi health, wellness and self-care inspiration.