In an unprecedented development, the speaker of Parliament Thoko Didiza was forced to postpone the 2025 Budget address by Finance Minister Enoch Godongwana on Wednesday.

This, after Cabinet failed to agree on a two percentage point value-added tax (VAT) hike included in the Budget. 

The Budget will now be held on March 12.

In a shock move that went against the wishes of both the parties participating in the Government of National Unity (GNU) and powerful civil society groupings, Godongwana proposed hiking VAT to 17% from April 1.

The hike was higher than the one percentage point increase signalled in leaks ahead of the Budget, which provoked vocal opposition days before Godongwana’s speech, including from key GNU member the Democratic Alliance, as well as African National Congress allies such as the Congress of South African Trade Unions and the South African Communist Party.

Godongwana decried the leak, which he attributed to a Cabinet member.

He also stressed that the VAT hike had not been dropped on Cabinet out of the blue, indicating that members had been made aware of the National Treasury’s directional thinking regarding the VAT increase two weeks prior to the special Cabinet meeting on February 19.

However, the size of the increase had not been disclosed.

The VAT hike, should it be agreed, would raise R58-billion in additional revenue in 2025/26 and was proposed against a backdrop of a R19.3-billion downward revision to the 2024/25 tax revenue estimate when compared with the 2024 Budget and a wider government deficit of 5%.

Godongwana said he was in favour of the high level of interest being shown in the trade-offs by Cabinet, which would now need to decide collectively how best to fund the GNU’s priorities.

The options he said, included expenditure cuts, tax hikes or increased borrowing; the latter would represent a break from the National Treasury’s current fiscal strategy, which is aimed as containing debt and reducing the fiscal deficit.

Godongwana said Cabinet had decided to postpone the release of the 2025 Budget to allow for further discussions, but said these discussions would not be broadened to other stakeholders, nor would it be feasible to conduct a wholesale expenditure review before March 12.

He also said there was no deadlock-breaking mechanism when it came to approving a Budget, which was a Cabinet document.