Key Highlights of the Budget Speech:
- VAT to increase by 0,5% to 15,5% as of 1 April and will be increased by another 0,5% in the 2026/27 financial year.
- Government is to issue a new infrastructure bond issuance this year to raise capital to fund new infrastructure projects including new dams and a high-speed rail service focussing on low-income areas
- Government debt to reach 76,2% of GDP in the 2025/2026 financial year
- No changes to personal tax rates
- No increases in Corporate tax rate
- No change to the medical tax rebates
- R23,4 billion allocated to public service wage agreement
- Budget deficit to reduce from 5% of GDP in 2024/25 year to 3,5% of GDP in 2027/28
- R5 billion allocated to the SA Defense Force for its troops in Congo
- SRD Grant to remain in Place
Urgent Need to Grow the Economy
Minister of Finance, Enoch Godongwana has delivered his 2025/26 budget and commented that “There is an urgent need to grow the economy faster” acknowledging that the growth at below 1% is not able to change the future of the country from its current state.
Godongwana said that despite all the debate over the VAT increase “The bigger debate is to decide how we grow the economy”.
However, meeting the budgetary requirements for the expanded infrastructure without reigning in government spending is not going to prove easy to accomplish.
Opposition Will Not Support the Budget Vote
John Steenhuizen, leader of the Democratic Alliance and GNU partner, said that the DA would not support the budget as it had been tabled. This would indicate that there had not been consensus around the budget within cabinet before it was tabled.
Steenhuizen said “I hope we can move to a more mature discussion around the budget” and said that “The DA cannot support a budget that does not go hard at economic growth” He said that the DA was expecting a big bold and aggressive move towards creating economic growth in the country and that this was lacking.
Athol Trollip of Action South Africa also said that “As it stands I don’t see how we can support the budget”. he indicated that they could not support a budget that did not address cutting of government spending while asking the poor to cough-up more of their pay in tax.
Social Media Commentary
Much of the social media comments indicated there was little support for the buget and VAT increase with one person commenting that ” The biggest, most expensive cabinet in the history of South Africa, is about to increase taxes on millions of struggling citizens”.
Rand Takes a Wobble
In response to the budget, the Rand dipped to a four week low at around R18,45 to the Dollar before correcting slightly to R18.36, with traders concerned about the conflict within the ruling coalition government.
