Latest news with #fiscalframework
Zawya
9 hours ago
- Business
- Zawya
South African budget law passes after months of delay
South Africa's parliament passed the budget's fiscal framework and revenue proposals on Wednesday, 11 June 2025 removing a key pillar of uncertainty for investors in Africa's biggest economy. The budget has been caught up in political wrangling for months and had to be reworked twice because of disagreements in the coalition government over plans to raise value-added tax (Vat). A majority of 268 lawmakers in the lower house, including from the two biggest political parties, the African National Congress (ANC) and the Democratic Alliance (DA), voted in favour of the budget's overall spending limits and revenue-generating measures. Eighty-eight lawmakers voted against and two abstained. South Africa had not experienced contested budget votes in the post-apartheid era until this year, as the ANC always had a parliamentary majority which made the votes a formality. It lost that majority in an election last year, entering a coalition with the DA and other smaller parties. The ANC and the DA had been at loggerheads over this budget until the finance minister backtracked on the proposed VAT hike. The two parties have more than half of the lawmakers in the 400-member National Assembly. Before Wednesday's vote, Finance Minister Enoch Godongwana told members of parliament that the tax increases that remained in his third budget version were aimed at funding social services like health and education. The DA said it supported the fiscal framework partly because it focused on infrastructure and contained spending reforms. Godongwana has tried to strike a balance between maintaining spending on frontline services and stabilising public debt levels, a worry for credit-rating agencies. Parliament still has to approve two other pieces of legislation, the division of revenue bill and the appropriation bill, for the budget to be entirely passed. All rights reserved. © 2022. Provided by SyndiGate Media Inc. (
The Herald
2 days ago
- Business
- The Herald
Godongwana declares contentious Budget the new normal as parly adopts fiscal framework
While finance minister Enoch Godongwana did not run this past weekend's Comrades marathon, his 2025 Budget finally reached the last mile of its race for adoption, after three lockups, two tablings and a court challenge. The National Assembly voted to adopt the 2025 fiscal framework and revenue proposals as well as the committee report thereof on Wednesday afternoon, with 268 voting in favour of the adoption, 88 voting against the adoption, and two abstentions. Godongwana told the National Assembly sitting that he suspected that over the next four years, the management of the Budget as well as the fiscal framework would be similar to how it was handled this year. 'We have had a painful journey to arrive at this date, where the fiscal framework is being approved. It has been a very painful journey. Definitely, from the Treasury perspective, we've drawn a number of lessons, but I suspect, also members of this house, must draw a number of lessons as to how, in practice, are we going to manage the debates around the fiscal framework moving forward?' Parliament's February sitting to table the Budget was postponed over resistance at a cabinet level to a VAT hike proposal. Godongwana returned to parliament in March with a revised VAT hike proposal, and the fiscal framework was challenged in court. He finally tabled a Budget in May with a fuel levy hike in place of the scrapped VAT hike. He challenged the assertion that his 2025 Budget was an austerity budget. 'This budget is not austerity. We are increasing taxes, not to focus on debt, but to focus on funding social services. Education, health and so on.' ANC MP and standing committee on finance chair Joe Maswanganyi moved for the adoption of the fiscal framework and revenue proposals report, saying that processing a budget within a coalition government can be complex due to the competing interests involved. In Godongwana's defence, Maswanganyi said anyone calling for Godongwana's head was out of tune with the realities facing coalition governments around the world. 'Considering these realities, particularly the tariffs and trade tensions initiated by the US , it is prudent to pay attention to the five-year plan ... This is not an austerity budget. The Budget has garnered praise for being pro-poor and pro-growth.' He said stakeholders welcomed the scrapping of the proposed VAT hike ahead of its effective day of May 1, but raised concerns over the financial impact of the fuel levy hike on business as well as middle-to-low-income households around the country. MK Party MP and former finance minister Des van Rooyen said his party rejected the committee's report on the 2025 budget as a 'sell-out pact' led by the parties that came together to form the government of national unity after last year's election. 'It is in this report that the ANC, DA, IFP, FF Plus, Action SA, and other GNU beneficiaries agreed that the majority of our people should be subjected to the fuel levy hikes and personal income tax. Think-tanks are in agreement that the fuel levy is the most regressive tax: even worse than VAT.' South Africans will pay more for work, school and travel expenses, and the buying power of people's income will be whittled away due to bracket creep. He said the report sought to protect the interests of a wealthy few. DA MP Wendy Alexander said for the first time in years, the budget process included ordinary South Africans rather than being rubber-stamped by a legislature where the ANC enjoyed a strong majority. She called the scrapping of the VAT hike a victory for democracy and South Africans. 'When citizens watch, comment and engage the budget process, the democracy grows, and this is precisely what the constitution envisioned — a government accountable to the people and not the other way around.' She said the GNU must prove that government can function across spheres when the stakes demand it. She said the projected 77% debt-to-GDP ratio was unsustainable and that the country could not be expected to build more schools and hospitals on the back of untenable debt levels. EFF MP Omphile Maotwe said her party rejected the fiscal framework and revenue proposal report as a project which would condemn South Africans to considerable tax burdens, courtesy of the 'former liberation movement', the ANC. 'It took the EFF to approach the Western Cape High Court to stop the VAT increase. If it were not for the EFF South Africans would already be paying 15.5% VAT today. The people of South Africa know now without any doubt that the EFF is the only dependable tool in the hands of the poor and the working class.' She said the fuel levy increase was an attack on motorists, the poor and the working class, who were already facing rising costs before the proposal was tabled. IFP MP Nhlanhla Hadebe said his party accepted the report. Supporting the report, Patriotic Alliance MP Ashley Sauls said the 2025 budget process tested the GNU's resolve as the government remained intact through an ordeal that has collapsed coalition governments elsewhere in the world. Freedom Front Plus MP Wouter Wessels pointed out that MPs calling for a wealth tax were calling for a deeper tax on themselves and their steep salaries. He said a credible budget was one where every rand and cent was channelled towards the benefit of ordinary South Africans. Action SA Alan Beasley said his party was among the first to oppose the proposed VAT hike, saying it was immoral to ask the poor to pay more for essentials while corruption goes unchecked. 'We welcome the minister's decision to scrap the VAT increase and are proud of the role we played in securing this outcome. We also welcome the R7.5bn n allocated to Sars over the medium term, an investment ActionSA championed.' He said that while Action SA rejected the R22bn raised through regressive taxes like fuel levy hikes and bracket creep, strengthening Sars is essential. 'Properly funded, Sars can close the tax gap, tackle illicit trade and boost revenue collection by a conservative R50bn annually. We are encouraged that the minister has committed to monitoring Sars's performance and will provide tax relief in next year's budget if revenue exceeds targets.' ACDP MP Steve Swart said the National Treasury should produce the fuel levy review that was promised to the legislature. He said while the ACDP believed in miracles, it appeared to be a remote possibility that South Africa's GDP would grow well beyond 2% in the coming years. UDM MP Nqabayomzi Kwankwa said the fuel levy was worse than VAT as there was no way of mitigating its regressive impact on low-income households, and anyone who considered the scrapping of VAT a victory for these households was being 'hypocritical'. Supporting the report, RISE Mzansi MP Songezo Zibi said the national balance sheet remained unsustainable as over 80% of the revenue collected by the SA Revenue Service (Sars) pays for over R820bn in salaries, R420bn in debt service costs and R440bn a year to the social security package. 'That leaves very little money to invest in the things we need to unlock economic growth and create sustainable jobs. [Dated] national and local infrastructure continues to choke our economy, together with policy assumptions that still assume we live in the 1960s.' BOSA MP Mmusi Maimane said one of the grimmest realities in the Budget's fiscal framework was that the rate of investment remained low, leaving the government with little funding for its spending programmes. 'I fear it is a missed opportunity for us to really speak about reform. The question we should be obsessed about is not just GDP growth or actually looking at debt. It should be the rate of investment in this country. And on the same budget, it proposes that our rate of investment is at 4.2%.' TimesLIVE
Zawya
2 days ago
- Business
- Zawya
South African parliament passes budget framework
South Africa's lower house of parliament passed the budget's fiscal framework and revenue proposals on Wednesday. The budget of Africa's biggest economy has been caught up in political wrangling for months. It has been reworked twice because of disagreements in the ruling coalition over plans to raise value-added tax. A majority of 268 lawmakers, including from the two biggest political parties the African National Congress (ANC) and the Democratic Alliance (DA), voted in favour of the fiscal framework and revenue proposals, while 88 voted against and 2 abstained. The ANC and the DA had been at loggerheads over the budget until the finance minister backtracked on a plan to raise value-added tax. The two parties have more than half of the lawmakers in the 400-member National Assembly. (Reporting by Alessandro Parodi and Sfundo Parakozov; Editing by Alexander Winning)
Bloomberg
2 days ago
- Business
- Bloomberg
South Africa Budget Approval in Sight After Tax Wrangle Ends
South Africa's National Assembly approved the Treasury's fiscal framework, bringing the adoption of the annual budget a step closer after months of wrangling over tax increases. The framework, which establishes economic policy, revenue projections and limits on government spending, was approved by 268 votes to 88, with two abstentions, at a sitting in Cape Town on Wednesday. The legislature is due to process other laws that underpin the budget by the end of next month.
The Herald
16-05-2025
- Business
- The Herald
Third time lucky? SA needs to plug R75bn budget hole
The government announced in February last year that it would start drawing from it, which it can do without parliamentary approval, to limit borrowing. In April the central bank's gold holdings jumped nearly 6% month-on-month to R245bn, driven by higher prices of the precious metal. Civil- society groups including the Institute for Economic Justice have urged Treasury to use the contingency reserves instead of raising tax. The government needs a simple majority to pass the budget, but further disagreements in the ruling coalition could derail a smooth vote. Parliament has 16 working days from when the budget is tabled to approve the fiscal framework and revenue proposals, after which it has to pass two other pieces of legislation, namely the division of revenue bill and the appropriation bill. The government can spend up to 45% of last year's budget until parliament has passed the new budget. After that, spending would have to be cut. The revamped fiscal framework, which sets overall limits for government spending, will be keenly watched by S&P Global Ratings, which has a positive outlook on SA and is scheduled to review its rating on Friday. A credible outcome could secure the first rating upgrade for SA in two decades, while the opposite could raise future borrowing costs and dent investor appetite for local assets. Reuters
