Cape Town – That was the third lucky case on Wednesday for Finance Minister Enoch Godonwana, who received a revised budget proposal from all major parties in the National Unity Government.
After rejecting the two proposals, Minister Godonwana quickly pointed out that “the national budget is not an accounting exercise that measures what we earn, what we are spending, and what we borrow as a nation.”
“This reflects the difficult trade-offs needed to balance fiscal sustainability while addressing developmental goals.”
With the complete refusal of Value Added Tax (VAT), which proposed a 2% point hike on March 12, the minister had to look elsewhere to insert the shortfall.
The Minister proposed an increase in the inflation coalition against general fuel collection.
“For fiscal year 2025/26, this is the only new tax proposal I have been making,” Minister Godonwana announced.
“This is the first increase in fuel taxes in three years.
“This means that from June 4th this year, general fuel collection will increase by 16 cents per liter with petrol and 15 cents per liter with diesel.
“Unfortunately, this tax measure alone will not close the financial gap in the medium term.”
However, Minister Godonwana said his budget proposal supports investments in sustainable finances, social wages and economic growth.
“This is not an austerity budget. It will increase profit expenditures by an average of 5.4% over three years,” he explained.
“The truth is, this is 0.8% growth, and it is also a redistribution budget.
“It directs 61 cents of all lands of unintegrated non-interest expenditures towards social wages.”
The finance minister said the funding would fund free basic services such as electricity, water, education, healthcare, affordable housing and social grants for those in need.
“This budget is investing more than 1 trillion Rs in critical infrastructure to increase the outlook for economic growth and improve access to basic services,” Minister Godonwana revealed.
He therefore said the 2026 budget needs to propose new tax measures aimed at raising R20 billion.
“We have allocated an additional R7.5 billion to the MTEF to increase the effectiveness of South Africa's revenue services (SARS) in raising more revenue,” Minister Godonwana said.
“Some of this allocation will be used to increase collection from debts paid to the finances.
“SARS shows that this can raise between R20 billion and R500 billion in additional annual revenue.”
The Minister said another portion of the additional allocation to SARS will be used to improve modernization.
“This includes targeting targets of cigarettes and illegal trade in other regions.
“SARS believes it could be at least R35 billion to use this investment to generate additional revenue, so R20 billion doesn't need to raise taxes to fill the current revenue gap.”
The Minister urged all South Africans, individuals, small and medium-sized business operators and large businesses to respect their tax obligations.
“We recognize that we need to do more to achieve this goal,” the Finance Minister said.
“Our commitment to collecting taxes must coincide with the better efficiency of the money costs.
“We need to match more rigorous surveillance, identifying issues quickly and providing timely solutions when things go wrong.
“We are not deaf to public concern about wasteful and inefficient spending.”
Without President Cyril Ramaphosa and Vice President Paul Mashatair, Vice President Gwede Mantashe witnessed a fun budget presentation.
In response to budget proposals, the second largest party of the Democratic Union, a national unified government – it “cautiously welcomes the Finance Minister's proposal for revenue and expenditure in its budget speech.
“I see this as a path to a national budget that should be able to support when the time comes for votes.”
The Good Party said: “The third iteration of budget 2025 provided by Finance Minister Enoch Godonwana today has managed to absorb the fiscal gap of R69 billion by removing the proposed 0.5% VAT increase without a complete improvement in social and infrastructure spending.”
The good party added: “To some extent, it is the holding budget to resolve the months of instability since the first version of the budget was rejected in March.
“The real work lies ahead by eliminating waste and reforming the budgeting process.”
However, the budget proposal has attracted acute criticism from the opposition, with Umkont Wesswe and the economic freedom fighter denounced it as an “austerity budget” and “indictment against the poor” that does not address economic inequality or create jobs.
