Latest news with #R75b
The Citizen
22-05-2025
- Business
- The Citizen
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. Breaking news at your fingertips… Follow Caxton Network News on Facebook and join our WhatsApp channel. Nuus wat saakmaak. Volg Caxton Netwerk-nuus op Facebook en sluit aan by ons WhatsApp-kanaal. Read original story on At Caxton, we employ humans to generate daily fresh news, not AI intervention. Happy reading!
The Citizen
21-05-2025
- Business
- The Citizen
Watch live: All eyes on Godongwana's ‘Budget 3.0' this afternoon
Dubbed 'Budget 3.0', the revised fiscal framework to be broadcast live by Finance Minister Enoch Godongwana at the Cape Town International Convention Centre this afternoon follows two failed attempts to pass the original 2025 Budget. The Witness reports that while the dispute within the Government of National Unity (GNU) over the 2025 Budget appears to have been resolved, attention has now shifted to the trade-offs Godongwana is expected to make when he tables his revised budget in Parliament at 14:00 today. On both previous occasions, Godongwana was not able to secure sufficient political backing, primarily due to his proposal to increase VAT — initially by 2%, and later by 0.5%. The VAT hike was intended to help close a R75b revenue shortfall facing the National Treasury. Investec Treasury economist Tertia Jacobs says today's budget is likely to reflect spending cuts, given National Treasury's reluctance to increase debt. 'Scrapping the VAT increase necessitates a reduction in spending to maintain a neutral impact on the budget deficit. 'The focus now will be on where said spending will be lowered, and the ability of the so-called GNU to craft a way forward that both demonstrates its priorities and allows for consensus,' she says. Disagreements over the budget had threatened to destabilise the coalition government, which is seen by many as a key stabilising force amid ongoing geopolitical tensions and a sluggish domestic economy. The DA, which drew criticism from its senior GNU partner — the ANC — after voting against the original budget in Parliament last month, now appears to be backing the revised version. DA leader John Steenhuisen, whose party had gone so far as to take Godongwana to court to compel him to revise the fiscal framework, expressed satisfaction with the recent consultation process. When asked in a recent interview about the progress of the talks, Steenhuisen said: 'We are going very, very well. 'There really is a sense of collaboration and working together to put on the table a credible budget that will be a strong, stable platform for us to go out and seek confidence from our investors, and also to start growing the economy and creating jobs.' Business Leadership South Africa CEO Busi Mavuso says government must now focus on reforms that stimulate growth to avoid future fiscal shortfalls. 'The growth outlook has deteriorated from February, when the budget was first tabled, meaning there will be less revenue in the form of tax collection and therefore a bigger headache on how to balance the books. 'At last week's business-government partnership meeting, held with the president, it was clear that we must speed up reform to drive economic growth. 'It is time for Parliament and government to show that we are capable of rallying around a coherent budget that maintains fiscal consolidation,' she says. Watch the 2025 Budget Speech live at 14:00: Breaking news at your fingertips… Follow Caxton Network News on Facebook and join our WhatsApp channel. Nuus wat saakmaak. Volg Caxton Netwerk-nuus op Facebook en sluit aan by ons WhatsApp-kanaal. Read original story on At Caxton, we employ humans to generate daily fresh news, not AI intervention. Happy reading!
