Budget 3.0: VAT hike scrapped, fuel levy rises
Finance Minister Enoch Godongwana yesterday tabled the long-delayed 2025 revised budget, successfully bridging a R75b revenue shortfall without the politically unpopular proposal to increase VAT.
Instead, he turned to alternative revenue sources — raising fuel levies and allocating billions to enhance tax collection — to meet the country's infrastructure and social spending needs while stabilising government debt.
The Witness reports that to recover the anticipated revenue, the revised budget introduces increases to fuel levies and scraps earlier plans to expand the list of zero-rated food items.
'It means from June 4 this year, the general fuel levy will increase by 16 cents per litre for petrol, and by 15 cents per litre for diesel,' Godongwana said.
Additional revenue will also be generated through SARS's improved collection systems.
'We have allocated an additional R7.5b over the Medium Term Expenditure Framework to increase the effectiveness of the SARS in collecting more revenue.
'Part of this allocation will be used to increase collections from debts owed to the fiscus.
'SARS has indicated that this could raise between R20b and R50b in additional revenue per year,' Godongwana said.
The R6.6t budget tabled yesterday maintains its focus on social and infrastructure investment, allocating R1t for public infrastructure and R1t to education — in part to hire more teachers.
Health has been allocated R845b.
'This budget will be increased by R20.8b over three years to employ 800 post-community service doctors, cover essential goods and services, and reduce accruals,' he said.
The old-age grant was raised by R120 to R2 310 a month, with a further R10 increase set for October.
The R370 monthly grant for unemployed people has been extended until March, but will undergo review.
Government is actively exploring various options to better integrate this grant with employment opportunities.
'This includes considering a job-seeker allowance and other measures, as part of the review of Active Labour Market Programmes. Our goal is to not only provide immediate relief,' he said.
Godongwana delivered the budget against the backdrop of growing concern over government debt, now at R5.6t.
While he said debt levels were being stabilised, he acknowledged the rising cost of servicing debt.
'Debt service costs remain high, amounting to more than R1.3t over the next three years.
'Put differently, this means in 2025/26 alone we are spending around R1.2b per day to service our debt.
'We must maintain our efforts to reverse this trend …,' he said.
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