Finance Minister Enoch Godongwana. Photo: Madelene Cronje
Members of the government of national unity (GNU) and opposition parties have put pressure on Finance Minister Enoch Godongwana not to raise taxes in his budget this week, threatening that they will not support the proposals if he does.
The coalition partners say if their demands are not met, they will add this to their list of grievances about not being heard, which they plan to air in the clearing house established to deal with disputes in the unity government.
The budget, together with National Health Insurance and the Expropriation Act, will be top of the agenda, sources told the Mail & Guardian.
Godongwana will deliver his 2025 budget speech in the National Assembly on Wednesday, outlining the government’s financial, economic, and social priorities.
In his mid-term budget speech in October, the finance minister hinted that additional revenue measures, including tax increases, may be necessary to address South Africa’s growing financial problems.
Despite his past reluctance to increase taxes, Godongwana has indicated that a one percentage point increase in VAT or personal income tax could generate about R25 billion annually. But opposition to this plan is growing across the political spectrum, the Sunday Times reported.
Entities such as the Democratic Alliance (DA), the Good party and the main labour federations, Cosatu and the South African Federation of Trade Unions, have strongly resisted tax hikes.
Good party secretary general Brett Herron said instead of increasing the taxes, Godongwana should focus on a budgetary shift to provide additional revenue sources.
This required “chucking out the business-as-usual approach to budgeting — which essentially involves incremental changes to last year’s budget and previous years — and moving to a new system [of] zero-based budgeting,” he told the Mail & Guardian on Monday.
“Zero-based budgeting requires re-evaluating each budgetary expense, starting from zero, rather than using the previous year’s budget as a base.”
A source in Rise Mzansi and another in Al Jama-ah, whose parties are in the unity government, said they felt that their budget proposals had fallen on deaf ears. Suggesting they had no option but to address their discontent through the media, they added that they hoped the finance minister would not add the budget to the many issues in the GNU.
“We hope the minister finds money elsewhere … there is money that is being wasted that can go towards making life easier than tax hikes,” one said.
ActionSA chairperson Michael Beaumont, whose party is not in theGNU, said the government should remove deputy minister positions and cabinet perks before implementing higher taxes to increase revenue.
“South Africans cannot be expected to shoulder higher taxes — whether VAT, personal income tax or company tax — while state corruption and mismanagement continue unchecked,” Beaumont said.
On Sunday, the DA’s finance spokesperson, Mark Burke, said Godongwana should focus on economic growth and fiscal discipline instead of raising taxes.
“South Africans are already struggling under the cost-of-living crisis, and to further burden our citizens would be completely unacceptable. We should prioritise these areas instead of imposing higher taxes,” Burke said.
Cosatu spokesperson Matthew Parks said workers were already under immense financial strain because of high inflation, rising interest rates and increasing debt. The federation argued that a VAT increase would be inflationary, suppress economic activity and reduce consumer demand.
“A VAT hike would signal that the government prioritises balancing fiscal books over the livelihoods of ordinary citizens. This will have serious political consequences as we approach the 2026 local government elections,” Cosatu said in a statement.
It added that proposed tax increases would disproportionately affect the working class while failing to address broader structural economic issues.
Beyond the tax debate, the treasury is also under pressure to manage public sector wages. State-owned enterprises such as Transnet and Eskom also continue to be a financial burden for the government.
Business Leadership South Africa chief executive Busisiwe Mavuso said the government must demonstrate fiscal responsibility without resorting to tax increases.
“The government must ensure it lives within its means, focusing on growth-enhancing activities and investment. This is the first budget from the government of national unity and will test its ability to set coherent spending priorities beyond party politics,” Mavuso said.
“If investors doubt the government’s ability to meet its financial obligations in the long term, they will hesitate to invest,” he added.
Mavuso said the return of Trump’s administration had introduced uncertainty, particularly regarding South Africa’s trade relations with the US.
“While we have benefitted from strong international partnerships, new tariffs on steel and aluminium exports will strain trade relations,” she said.
The Good party’s Herron said while the withdrawn US aid had added financial pressure on the country, poverty remained its greatest existential threat, not Trump or Afrikaner lobby group Afriforum, which has denied pushing Washington for punitive measures against South Africa.
“The fact that 18 million South Africans of working age can’t afford to feed themselves — last year the food poverty line was R796 a month — and therefore qualify for the R370 SRD [social relief of distress] grant which only 10 million receive due to budgetary constraints, creates a ticking time-bomb,” he said.
Source:
mg.co.za
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