Latest news with #2025FiscalFramework
Daily Maverick
3 days ago
- Business
- Daily Maverick
SA needs structural reform and moral courage, not more fiscal tinkering
At the third time of asking, on Wednesday, 11 June, Parliament considered, debated and voted for the 2025 Fiscal Framework, the basis for the Government of National Unity's (GNU) very first budget. To paraphrase former US congressman and economist Phil Gramm, passing a pro-growth budget is like going to heaven – everybody wants to do it, but nobody wants to do what you have to do to get there. Unfortunately, the GNU was not willing to do what it takes, and instead pushed through a budget that will not produce the rapid investment and growth required to begin our journey out of the economic doldrums. Growth flat, investment dried up, and taxes on the rise. We will be back here next year, facing another round of tax increases, because there will have been little to no investment. A budget ought to be a blueprint for progress. A reflection of our values, our priorities and our path forward as a country. The 2025 Fiscal Framework was preceded by the GNU's 31 priorities in its Medium-Term Development Plan, a bold promise of reform and delivery. Yet the Fiscal Framework tabled in Parliament offers no clear roadmap for achieving those priorities. There is no strategic alignment between what the government says it wants to do and what it is willing to fund. Without that alignment, these priorities are reduced to political rhetoric. We've seen this playbook before. The National Development Plan (NDP), hailed over a decade ago as the blueprint for South Africa's long-term development, now serves more as a reminder of broken promises than a source of policy coherence. Most of its targets on jobs, education, crime reduction and infrastructure remain unmet. Over the past 10 years, our economy has grown at an anaemic average of less than 1% per year. In the most recent quarter, growth was a paltry 0.1%. The only sector showing sustained growth is financial services. Meanwhile, real economy, labour-absorbing sectors such as agriculture, mining, manufacturing, construction, trade and transport have all declined in their contribution to GDP. These are precisely the sectors that should be powering inclusive growth and job creation. Gross fixed-capital formation, which is the clearest indicator of future growth and productivity, remains stagnant at 4.2%. These numbers are warnings. And they are being ignored. The diplomatic disaster last month at the White House only confirmed what many investors already suspect: South Africa is becoming uninvestable. And we are seeing the consequences. I recently visited Accra, the capital of Ghana, and you can feel the difference in the air. Cranes fill the skyline, a clear signal of construction, investment and progress. How many cranes are visible in Johannesburg, Cape Town or Durban today? We cannot tax our way out of this crisis. We must invest our way out. And that means fundamentally rethinking how we use the public purse. We must prioritise investments that unlock growth – in infrastructure, digital connectivity and efficient public transport systems. We need to fast-track the rollout of modern special economic zones, backed by genuine incentives. Instead of bold reforms or pro-growth investments, the Budget leans on familiar and increasingly regressive tactics: raising taxes on the already-overburdened middle class and borrowing more from international lenders without a clear plan for debt repayment or structural reform. This year's tax increase comes disguised as 'bracket creep' in personal income taxes, effectively taxing South Africans more without explicitly changing the rates. Next year, there are already whispers of additional taxes on the horizon. The government is milking a shrinking base instead of expanding the economic pie. Years ago, when VAT was raised, we were promised serious spending reforms and a leaner, more effective state. That promise, too, has faded. The state remains bloated, with an oversized Cabinet and a civil service often rewarded more for loyalty than for performance. There are still no performance scorecards linked to Cabinet roles. There has been no movement on taxing high-turnover, high-risk sectors such as online gambling. And crucial functions such as policing and justice remain underfunded and underperforming. The human cost of this drift is staggering. Education budgets in key provinces such as Free State, KwaZulu-Natal and North West are taking a hit, on track to run out of funds to support teachers. Our doctor-to-patient ratio now stands at 1 to 3,000, a clear sign of a healthcare system under collapse. The National Prosecuting Authority continues to buckle under the weight of its mandate, unable to bring criminals to justice in a country overrun by corruption and violent crime. There are small signs of momentum. Minister Barbara Creecy's commitment to rail and transport reform is welcome. Fixing our logistics network is essential for reigniting growth in key sectors such as agriculture and manufacturing. But isolated reforms are not enough. We need a coherent, national strategy backed by real budgetary commitments. I reject the idea that this is the best we can do. South Africa does not need more fiscal tinkering. We need structural reform and moral courage. I am proposing three immediate steps to be pursued in round two and three of the budget process , asParliament considers the Appropriations Bill and the Division of Revenue Bill. First, cut wasteful spending. Initiate independent, sector-wide spending reviews to reduce inefficiencies, and reallocate funds to frontline services. Second, legislate for investment. Pass laws that make South Africa the easiest place in Africa to do business. Prioritise local businesses with the same urgency we show global ones such as Starlink.
The South African
29-05-2025
- Business
- The South African
EFF takes legal action to block fuel levy hike
The Economic Freedom Fighters (EFF) have filed an urgent application in the Western Cape High Court. They want to stop Finance Minister Enoch Godongwana from implementing the fuel levy increase announced in the 2025 Budget Speech. The government plans to raise the fuel levy by 16 cents per litre for petrol and 15 cents for diesel, effective from June 2025. The party claims it repeatedly cautioned the Minister and appealed to his conscience. It warned him of the impact such a move would have on poor and working-class South Africans amid a deepening cost-of-living crisis. The party insists that the government should follow proper constitutional and legislative processes for the fuel levy hike. It compares this to how Parliament previously rejected the VAT increase. The EFF warned that skipping Parliament weakens democracy and could lead to more bad decisions in future. The EFF warns that implementing the levy without a Money Bill could lead the courts to declare the national budget invalid even after the funds have been spent. The party says such a ruling would jeopardise the country's fiscal credibility, disrupt service delivery and damage public confidence in government institutions. They stress that the issue is not only legal but economic, as the fuel levy directly affects transport, food, and other basic goods. The EFF says the increase will hit the poorest households hardest. It insists it will not stand by while technocrats override democratic processes. The EFF has written to the Speaker of the National Assembly and the Chairperson of the Standing Committee on Finance. It warned them not to proceed with adopting the 2025 Fiscal Framework if it includes the fuel levy hike. They urge Parliament to act responsibly and call on the Minister to withdraw what they describe as a reckless decision. Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1 . Subscribe to The South African website's newsletters and follow us on WhatsApp , Facebook , X, and Bluesky for the latest news.
IOL News
20-05-2025
- Business
- IOL News
Julius Malema calls for change in economic planning ahead of budget speech
EFF leader Julius Malema leads a march in Pretoria on Monday to celebrate victory against VAT hike. Image: Oupa Mokoena/ Independent Newspapers EFF leader Julius Malema has expressed skepticism towards Finance Minister Enoch Godongwana's upcoming budget speech, calling for a shift in economic planning. Addressing thousands of EFF supporters marching from the Union Buildings to the National Treasury office in Pretoria, celebrating their party's victory against VAT hike, he said he expects the budget speech on Wednesday to be "another lie". He predicted that the budget speech will be devoid of plans for job creation, economic growth, or support for state-owned enterprises like Transnet. The EFF march follows the Western Cape High Court's ruling that suspended the proposed VAT increase and invalidated the 2025 Fiscal Framework, citing the National Assembly's unlawful adoption of the framework. The EFF and DA spearheaded the legal challenge. Malema claimed the government wants to privatise the state-owned enterprises so that people can be out of jobs. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ He further accused the National Treasury of failing to invest into massive infrastructure projects that create jobs and grow the economy. 'This Treasury is the one running South Africa. The National Treasury has not been putting money in massive infrastructure. They have not been putting money in projects that are going to create jobs and grow the economy. Our economy has been growing at 1% because of the Treasury saying we must put in place measures that are going to cut money and that money they cut from essential services. From the things that serve black people. They cut money in education, health, and the police,' he said. He called for planning powers to be taken away from the National Treasury and given to politicians instead. 'It must be a decision of politicians as to what we are going to do this year and the Treasury must just take the money and finance what the politicians have said they are going to do this year,' he said. He questioned why the Reserve Bank must have private shareholders, saying it must truly belong to South Africa to guarantee the country's sovereignty. The march was also used to demand an end to data expiry dates for consumers. Malema said that data was important for students to do research and for the unemployed youth to search for jobs. 'We are not asking for luxury. We met with MTN and we told them that we don't want this thing of data expiring and airtime. We equally want them to reduce the money for data. It is more expensive in South Africa compared to other countries,' he said. Cape Times
IOL News
19-05-2025
- Business
- IOL News
Malema criticises Finance Minister's upcoming budget speech
EFF leader Julius Malema leads a march in Pretoria on Monday to celebrate victory against VAT hike. Image: Oupa Mokoena/ Independent Newspapers EFF leader Julius Malema has expressed skepticism towards Finance Minister Enoch Godongwana's upcoming budget speech, calling for a shift in economic planning and demanding an end to data expiry for consumers. Addressing thousands of EFF supporters marching from the Union Buildings to the National Treasury office in Pretoria, celebrating their party's victory against VAT hike, he said he expects the budget speech on Wednesday to be "another lie". He predicted that the budget speech will be devoid of plans for job creation, economic growth, or support for state-owned enterprises like Transnet. The EFF march follows the Western Cape High Court's ruling that suspended the proposed VAT increase and invalidated the 2025 Fiscal Framework, citing the National Assembly's unlawful adoption of the framework. The EFF and DA spearheaded the legal challenge. Malema claimed the government wants to privatise the state-owned enterprises so that people can be out of jobs. 'Prasa, Transnet, Eskom and all those state institutions that are owned by the government were created to create jobs for white Afrikaners. Now that white Afrikaners have gone to America they are saying we must close those things and not give them money so that you cannot get jobs,' he said. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ He further accused the National Treasury of failing to invest into massive infrastructure projects that create jobs and grow the economy. 'This Treasury is the one running South Africa. The National Treasury has not been putting money in massive infrastructure. They have not been putting money in projects that are going to create jobs and grow the economy. Our economy has been growing at 1% because of the Treasury saying we must put in place measures that are going to cut money and that money they cut they cut from essential services. From the things that serve black people. They cut money in education, health, and the police,' he said. He called for planning powers to be taken away from the National Treasury and given to politicians instead. 'It must be a decision of politicians as to what we are going to do this year and the Treasury must just take the money and finance what the politicians have said they are going to do this year,' he said. He questioned why the Reserve Bank must have private shareholders, saying it must truly belong to South Africa to guarantee the country's sovereignty. The march was also used to demand an end to data expiry dates for consumers. Malema said: 'We are here to ask why our data is expiring but the phone is not expiring. We do not want data to expire and we don't want airtime to expire.' He cited that data was important for students to do research and for the unemployed youth to search for jobs. 'We are not asking for luxury. We met with MTN and we told them that we don't want this thing of data expiring and airtime. We equally want them to reduce the money for data. It is more expensive in South Africa compared to other countries,' he said.
IOL News
02-05-2025
- Business
- IOL News
Impact of VAT increase suspension on local government budgets
Parliament's Settlement on VAT Hike: Implications for Municipal Budgets Image: Armand Hough / Independent Newspapers Following the scrapping of the planned 0.5% increase in Value-Added Tax (VAT), initially scheduled to come into effect on May 1, 2025, several previously approved municipal budgets have also been set aside, further complicating local government financial planning. This suspension means that not only is the national budget process delayed, but local government budgets—previously approved and scheduled for implementation—are also temporarily on hold, affecting service delivery and development projects at the municipal level. The ripple effects underscore the broader economic and administrative uncertainty created by the legal and political developments surrounding the VAT hike. On April 27, 2025, Parliament entered into an out-of-court settlement concerning the contentious VAT hike and the broader 2025 Fiscal Framework. The settlement, sanctioned by the Cape High Court, suspends the implementation of VAT increases and sets aside the resolutions adopted by Parliament's two Houses—the National Assembly and the National Council of Provinces—regarding the Fiscal Framework. This means that the original Appropriation Bill, which details government spending and allocates funds to various departments, has been withdrawn and is no longer before Parliament. As a result, Parliament said the scheduled budget votes—crucial steps in the legislative process, are currently on hold. It also stated that municipal budgets, already approved for the current financial year, are being set aside. What Happens Next? Parliamentary spokesperson Moloto Mothapo explained that a new Appropriation Bill and revised budget instruments must be drafted and introduced through the upcoming Budget Speech. Once these are tabled, the legislative Houses must reschedule their review and approval processes. 'A new Appropriation Bill and revised budget instruments will need to be introduced, after which the budget votes will be scheduled afresh by the legislative framework and parliamentary procedures,' Mothapo stated. He emphasised that the National Assembly and the National Council of Provinces must review and restructure their programs accordingly. The respective Programme Committees will set new timelines to ensure that all legislative steps are completed efficiently and that the budget is passed within the legally prescribed timeframes, in line with the Money Bills and Related Matters Act, 2009.
