Cape Town – Finance Minister Enoch Godonwana presented his 2025 budget to Congress after the Cabinet Minister held a special meeting after Ministers rejected a reworked budget without a 2% VAT increase.
The budget presentation was initially postponed to February due to differences in opinion between the parties to the National Unified Government (GNU) over the proposed increase in VAT.
Income and tax proposals
* VAT rates rise by 0.5 percentage points in 2025/26, 0.5 (16%) in 2026/27
*No adjustments to inflation for personal income tax ranges, rebates, or medical tax credits
*These measures will raise R28 billion in 2025/26 and R14.5 billion in 2026/27
*R3.5 billion allocated to SARS this year and R4 billion over the medium term
Key expenditure priorities
*Additional funding for major programs in the medium term
* States receiving R2.4 trillion R2.4 trillion during the Medium Term Expenditure Framework (MTEF) period
*Local government fair shares will increase from R99.5 billion to R115.7 billion by 2027/28
*Public sector wage contracts will be charged additional costs in 2025/26.
*R100 billion to increase developmental subsidies in early childhood
* Health expenditures to increase from R277 billion to R329 billion by 2027/28
*Increased social grants: geriatric/disability (+R130), child support (+R30), foster parents (+R70)
*Social relief for Covid-19 pain has been extended by one year (R35.2 billion allocated)
*R9.4 billion for defense forces and correctional services
Infrastructure Investment
R1 trillion public infrastructure over the next three years:
*R40.2 billion for transportation and logistics
*219.2 billion R200000 for energy infrastructure
*R156.3 billion for water and sanitation
*New PPP regulations effective June 1, 2025
*Budget facilities for infrastructure reconfigured to run multiple bid windows
* First infrastructure bond issued on 2025/26
State Capacity and Budget Reform
*The Ministry of Finance leads efforts to improve spending effectiveness and efficiency
* Audit of “ghost workers” in national and state sectors
*Implementation of recommendations for conditional grant review
*R1.7 billion allocated for future disasters, R4 billion for recovery backlog
