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IOL News
3 hours ago
- Business
- IOL News
Third time's the charm: Godongwana's 2025 budget finally approved
Minister of Finance, Enoch Godongwana's 2025 National Budget has finally been approved following the adoption of the fiscal framework that is the backbone of the budget. Image: Independent Newspapers Minister of Finance, Enoch Godongwana's 2025 National Budget has finally been approved following the adoption of the fiscal framework that is the backbone of the budget. This was Godongwana's third attempt to get the National Budget passed after an outcry over two proposals to increase VAT. During a joint meeting with Standing Committee on Finance, and the Select Committee on Finance, Members of Parliament adopted the document that establishes economic policy and revenue projections and sets the overall limits for government spending. The process, which took three hours on Wednesday, was not without its issues, with some members arguing that the process was flawed and that not everyone was able to make their voice heard. Insults also flew, with one member saying that her peers should 'learn to read'. In presenting the May 21 National Budget, Godongwana said there were no austerity measures, although government spending was held back. The fuel levy as well as sin taxes were increased. The budget invests over R1 trillion in critical infrastructure to lift economic growth prospects and improve access to basic services, Godongwana said on May 21. He added that this would be done without compromising the fiscal strategy of sustainable public finances. 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 ✕ Ad loading Government has achieved its balancing act by reducing additional spending over the medium term by R68 bilion after facing a R75bn revenue hole as VAT was not being increased. In May, Godongwana added that the government would continue to pay large amounts to service debt, which would amount to more than R1.3 trillion over the next three years. 'Put differently, this means in 2025/26 alone we are spending around R1.2bn per day to service our debt,' he said. IOL
IOL News
3 days ago
- Business
- IOL News
EFF rejects fuel levy as an attack on the poor
EFF treasurer-general Omphile Maotwe has written to Finance Minister Enoch Godogwana rejecting the fuel levy. Image: Nhlanhla Phillips / Independent Newspapers By: Omphile Maotwe On 21 May 2025, the Minister of Finance tabled the third version of the 2025/26 national budget. Instead of solutions to South Africa's deepening fiscal and social crisis, the Minister delivered a cold and calculated betrayal. He proposed an increase to the general fuel levy by 16 cents per litre for petrol and 15 cents for diesel. True to what the Economic Freedom Fighters (EFF) and the country has come to expect from the GNU led administration, the proposal was dishonestly framed as a 'regulatory adjustment' instead of a tax increase. This levy aims to recover R1.3 billion in revenue after the courts struck down the unlawful VAT increase that featured in the initial budget proposal. The EFF is clear that the fuel levy is not a regulatory tweak but rather a tax hike that is being unlawfully imposed through the Customs and Excise Act, instead of through the Money Bill Act, as mandated by section 77 of the Constitution. We reject this proposal precisely because it is illegal and anti-poor. Our Constitution empowers only parliament to impose a national tax through the money bill. The Minister should therefore not be using administrative regulation to introduce a tax increase. The levy is a tax, even the government's own Budget Review refers to this fuel levy increase as part of 'fuel taxes on petrol and diesel.' Proceeding with it in this manner will only serve to defy the constitution, undermine Parliament's authority, and rob South Africans of their right to participate in fiscal decisions that directly affect their lives. The judiciary was clear in its handling of the initially proposed VAT increase by the Minister. A 2% VAT increase was proposed which was brought down to 0.5% but ultimately through the work of the EFF, it was recognised as a tax measure implemented outside of the law by the judiciary and subsequently suspended. Yet here we are again with a Minister who is determined to continue to undermine parliament and the courts. As the EFF we recognise this as arrogance, contempt and a blatant disregard of the law. The economic consequences of this illegal fuel levy will be devastating. While R1.3 billion may seem insignificant to Treasury, its impact on the working class and ordinary people of this country will be economically challenging. Fuel costs are a direct driver of inflation in transport, food, and essential services. For a worker commuting daily, a student relying on taxis, or a small trader transporting goods, this increase is not abstract. It is an attack on their survival. Our country is facing an economic crisis. That much is clear but as the EFF we will always be the voice that shields the poor from carrying an economic burden that results from poor governance and mismanagement. The crisis was not created by our unemployed youth in Tembisa or the grandmother in Giyani. It was not created by the street vendor in Umlazi or the taxi driver in Mthatha. The crisis was created by the ANC government through corruption, mismanagement, and a neoliberal austerity agenda that punishes the poor and protects the rich. The EFF has taken decisive action regarding the fuel levy and on 26 May 2025, we wrote to the Speaker of the National Assembly and the Chairperson of the Standing Committee on Finance, demanding immediate parliamentary intervention. We called for the Minister of Finance to withdraw the proposed levy because it must be introduced through the Money Bill Act. We further urged the Finance Committee to place this matter on its agenda, summon the Minister to account, and reaffirm Parliament's constitutional authority over all revenue measures. This matter deserves urgent attention because if the levy is allowed to proceed in its illegal state, we run the risk of further legal challenges and collapsing the fiscal framework. No legitimate parliament would endorse a budget that is tainted by unlawful taxation. What is most alarming is that if the 2025/26 Budget is not adopted by 31 July as required by the Constitution, the government could face an administrative shutdown under section 21. The EFF however is not opposed to raising revenue legitimately. We support progressive taxation that will fund development, create much-needed jobs, and render services to our people. But taxation must be lawful, fair, and aimed at those with the most. The government needs to urgently impose a wealth tax, close corporate tax loopholes, and end illicit financial flows. Revenue can also be raised by scrapping the bailouts to failing state-owned entities but the EFF is against putting further strain on the poor and working class. Imposing a fuel levy is a political decision and must be recognised as such. The EFF will not be silenced or intimidated by political bullies who continue to disregard the law, due process and undermine parliament and our constitution. We stand ready to fight against the injustices that will emanate from this tax increase that is disguised as an adjustment. We will fight against it in the corridors of parliament, in the confines of the courtrooms, and ultimately on the streets and on the picket lines. We will challenge this decision because we recognise it for exactly what it is, a bid to squeeze the poor and continue to cushion the rich and politically connected. Parliament should not allow the fuel levy to proceed as it threatens to render our institutions irrelevant. The people of South Africa did not vote for a government that will govern without notice, and parliament should be at the forefront of protecting the people who have entrusted us to lead and represent them. We call on all progressive forces to demand accountability, consultation, and for parliament to reclaim its power. The time has come for parliament to decide if it will stand with the people of South Africa or bow down to an unaccountable executive. The EFF stands with the people. * Omphile Maotwe is the Treasurer General of the Economic Freedom Fighters and a Member of Parliament ** The views expressed do not necessarily reflect the views of IOL or Independent Media
Eyewitness News
6 days ago
- Business
- Eyewitness News
PRASA reveals it's spent R1.3bn so far on getting CT's central line back on track
CAPE TOWN - The Passenger Rail Agency of South Africa (PRASA) said it spent R1.3 billion so far to ensure that train services on Cape Town's central line were back on track. It's the busiest train corridor in the Western Cape, transporting more than 600,000 passengers daily during peak times. The central line was brought to its knees by illegal occupation of railway tracks and infrastructure vandalism just before the COVID-19 pandemic. ALSO READ: • Creecy hails reopening of Chris Hani rail corridor on CT's central line as a critical milestone • After Chris Hani rail corridor reopened, Hill-Lewis keen to see full train service resume in CT • Crucial link in Cape Town's central rail network reopens PRASA officials said they'd made inroads in recovering almost all train services, except for three train stations. Transport Minister Barbara Creecy, together with PRASA officials, went on a train ride on Thursday from the Chris Hani train station in Khayelitsha to the Cape Town CBD. This was part of the re-launch of train services to this leg of the city's central line. PRASA CEO Hishaam Emeran said that the R1.3 billion spent excluded the procurement of new trains. "It's mainly on the infrastructure recovery. Rebuilding the tracks, looking at our electrical infrastructure, the overhead lines and our substations that we had to rebuild, the passenger stations that we had to rebuild." He added that that full train services should be restored by the end of July on all rail networks in the Mother City.
Eyewitness News
22-05-2025
- Business
- Eyewitness News
South Africa's fiscal debt to GDP expected to peak at 77%
JOHANNESBURG - South Africa's fiscal debt to GDP is expected to peak at 77% this year, as the government continues to battle to get public debt under control. The alarming debt figure was announced by Finance Minister Enoch Godongwana while tabling the May budget at the National Assembly on Wednesday. This is higher than previous projections when debt to GDP was estimated to peak at 76% during the previous budgets, making it the highest ever. Godongwana said the latest revision was partly due to the impact global trade tensions are likely to have on South Africa's growth forecast. While Godongwana denies the government is losing the war against public debt, he admits it also cannot be downplayed. 'Debt service costs remain high, amounting to more than R1.3 trillion over the next three years. Put differently, this means in 2025/26 alone, we are spending around R1.2 billion per day to service our debt. We must agree this is unacceptable. This is more than what we spend on frontline services such as health, the police and basic education.' ALSO READ: Govt's service debt costs must be renegotiated - Maswanganyi
IOL News
22-05-2025
- Business
- IOL News
South Africa's National Budget: Stability in the Rand amid muted market reactions
Finance Minister Enoch Godongwana delivers the Budget speech in National Assembly held at CTICC in Cape Town. Image: Kopano Tlape/GCIS Following Finance Minister Enoch Godongwana's muted presentation of the National Budget, for the third time, on Wednesday, markets haven't been seriously agitated, and the fiscal framework is being seen as broadly investor friendly. The rand was stable early on Thursday morning at R17.97, after closing at a similar level after the National Budget was presented. It had opened at R17.89 on Wednesday, which signifies no major movement. The JSE's All Share Index, by late morning, was 0.56% down on the day, coming off its 1% gain and seven-day high at Wednesday's close. Old Mutual wealth investment strategist, Izak Odendaal, said the 'decidedly uneventful' and 'boring' National Budget was good and the financial market response was muted. The rand was stable early on Thursday morning at R17.97, after closing at a similar level after the National Budget was presented. Image: Morningstar 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 ✕ Godongwana proposals included limiting direct tax increases to so-called 'sin' taxes, an increase in the fuel level, although he did say that gross domestic product (GDP) for the year would come in at 1.4% this year, down from a previously predicted 1.9%, markets haven't moved dramatically. At the same time, he said it was not an 'austerity' budget, indicating that he did not seek to reduce expenditure dramatically. He did, however, warn that subsequent budgets would need to ensure that government received more revenue, and that government would continue to pay large amounts to service debt, which would amount to more than R1.3 trillion over the next three years. South Africa's two previous Budget attempts failed to gain approval because of proposed VAT hikes, and markets had been concerned over DA threats to leave the multi-party government. Investec chief economist, Annabel Bishop, said that – with revenue and expenditure projections revised lower, and genuine potential for upside on revenue – the credit rating agencies are unlikely to react negatively. Casey Sprake, economist at Anchor Capital said, post the National Budget, National Treasury has made a significant policy pivot by cutting R70 billion in spending over the period between fiscal 2026 and 2028, which offsets the lower revenue trajectory and helps stabilise the main budget deficit. 'In an environment where fiscal credibility is under strain, such restraint is likely to be well received by financial markets,' she noted. Odendaal said that the 'key thing from investors' point of view is that fiscal consolidation remains the priority'. Sprake added that the 2025 National Budget is 'broadly seen as marginally bond-positive and moderately supportive of the rand over the medium term, primarily due to its emphasis on expenditure restraint amid lower revenue projections'. What is crucial, Sprake added, is that government has chosen to rein in spending rather than implement broad-based or distortionary tax increases which is 'an approach that sends a constructive message to investors'.
