Finance Minister Enoch Godongwana.
Mixed feelings emerged following Finance Minister Enoch Godongwana's much awaited Budget Speech for 2025 which was postponed to March 12th after it was rejected by some political parties within the 7th administration of the National Government of National Unity GNU which raised the eyebrows of the public in the country.
This revised budget presented on Wednesday by SA Finance Minister Godongwana was immediately rejected by major political parties, even though a proposed increase in value-added tax was sharply reduced.
Godongwana who was under pressure confirmed that the National Treasury will raise value-added tax by 0.5 percentage points on 1 May 2025 and by the same margin on 1 April 2026, bringing the rate to 16% from the VAT of 15%.
This is lower than the proposed 2% increase which was dismissed by the Democratic Alliance which said the VAT still threatens to stoke inflation and deter consumer spending. The DA stressed that indeed retailers and manufacturers are among the businesses that will likely be impacted.
DA leader John Steenhuisen said: “The DA made it clear to the ANC ... that we would not support any increase in taxes unless those increases were temporary." DA leader John Steenhuisen in a statement.
Former President Jacob Zuma’s new political toy uMkhonto we Sizwe, and Julius Malema’s red beret forces the Economic Freedom Fighters also rejected the new budget - ruling out the small possibility that the ANC could turn to them for votes.
President Cyril Ramaphosa said Godongwana had made the difficult choices, and now parliament must come up with solutions.
Tax methods projected in the latest budget would produce an additional 28 billion rand ($1.53 billion) in the fiscal year starting on April 1, the Minister confirmed that less than half the 58 billion the Treasury had initially hoped for.
The revised budget documents showed that additional funds would come from contingency reserves.
The deficit is now forecast at 4.6% of gross domestic product in 2025/26, and debt is forecast to hit 76.2% of GDP, while the VAT hike is expected to raise inflation. ($1 = 18.3462 rand)
Minister Godongwana presented the National Budget Speech to parliament on 12 March. The 2025 Government Fiscal Strategy focuses on a balanced budget that supports economic growth.Godongwana stated that Treasury's strategy for achieving faster growth is based on four key pillars: maintaining macroeconomic stability, implementing structural reforms, improving state capability and accelerating infrastructure investment.
Grants to increase during 2025/26/. The Minister announced that R284.7 billion was allocated to grants in 2025/26.
This means that the Old Age grant will be increased by R130 to R2315. Disability grants will experience the same increase in April. The Child Support Grant will go up by R30 to R560 per month while the Foster Care grant will increase by R70.
In the meantime, an increase from last year’s budget, the R130 increase for the Old Age and Disability grants is higher than what was increased last year.
Last year, the increase was only R100. Foster Care went up by R50 last year, while Child Support only went up by R20.
Meanwhile, it remains to be seen if the ANC will get support from opposition parties to pass the tabled Budget Speech and get votes to govern peacefully after losing its status as a ruling party.
Comments