Cape Town — Finance Minister Enoch Godongwana presented his 2025 Budget to Parliament after Cabinet ministers held a special meeting to discuss it for a second time after they rejected a reworked Budget without the disputed 2% VAT increase.
The Budget presentation was initially postponed in February due to disagreements on the proposed VAT increase among the parties in the Government of National Unity (GNU).
Revenue and Tax Proposals
* VAT rate to increase by 0.5 percentage points in 2025/26 and another 0.5 in 2026/27 (to 16%)
* No inflationary adjustments to personal income tax brackets, rebates, and 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 plus R4 billion over medium term
Key Spending Priorities
* R232.6 billion additional funding to key programs over medium term
* Provinces to receive R2.4 trillion over Medium-Term Expenditure Framework ( MTEF) period
* Local government equitable share increases from R99.5 billion to R115.7 billion by 2027/28
* Public sector wage agreement will cost additional R7.3 billion in 2025/26
* R10 billion to increase Early Childhood Development subsidies
* Health spending to grow from R277 billion to R329 billion by 2027/28
* Social grants increased: Old age/disability (+R130), Child Support (+R30), Foster care (+R70)
* COVID-19 Social Relief of Distress extended by one year (R35.2 billion allocated)
* R9.4 billion for defence force and correctional services
Infrastructure Investment
R1 trillion for public infrastructure over next three years:
* R402 billion for transport and logistics
* R219.2 billion for energy infrastructure
* R156.3 billion for water and sanitation
* New PPP regulations effective June 1, 2025
* Budget Facility for Infrastructure reconfigured to run multiple bid windows
* First infrastructure bond to be issued in 2025/26
State Capability and Budget Reforms
* Treasury to lead efforts to improve spending effectiveness and efficiency
* Audit of “ghost workers” in national and provincial departments
* Implementation of conditional grant review recommendations
* R1.7 billion allocated for future disasters, R4 billion for recovery backlogs
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