Government spending is expected to reach R2.4 trillion this year, growing at a rate of 5.6% over the next three years.
Additional spending requirements came from an extension to the Social Relief of Distress Grant to March next year, above inflation public service wage increases, frontline services, social grants increase and infrastructure among others.
Finance Minister Enoch Godongwana says the budget deficit, which is the difference between tax collections and government spending, is projected to increase at 5% of Gross Domestic Product this year.
He says an increased budget allocation for SARS will help boost revenue.
“ Broadening the tax base and improving the administrative efficiency of the South African Revenue Service, allows us over time, to spread the tax burden more evenly and equitably. With this in mind, SARS is allocated R3.5 billion in the current financial year and an additional R4 billion over the medium term. By the end of February this year, SARS reported a significant increase in undisputed debt. This means billions of Rands are owed to the State.”
INFOGRAPHIC | Consolidated Expenditure #BudgetSpeech2025 pic.twitter.com/KPOsqY5twE
— SABC News (@SABCNews) March 12, 2025
Increase on Sin Tax affecting Alcohol and Tobacco products is as follows. #BudgetSpeech2025 pic.twitter.com/eqjaQSHhdr
— SABC News (@SABCNews) March 12, 2025
Tax revenue
Meanwhile, Godongwana says tax revenue collections came in below expectations, resulting in a revenue shortfall of R16.7 billion.
National Treasury has argued that the new tax proposal will increase revenue by R28 billion next year and R14 billion in the following year.
Apart from the proposed one-percentage point VAT increase over the next two years, other tax proposals include adjustments to medical tax credits, above-inflation increases in excise duties on alcohol and tobacco products and an increase in the carbon tax.
“The government is very aware of the cost-of-living pressures faced by households, including high food and fuel prices and rising electricity and transportation costs. This is why we are taking concrete steps to protect vulnerable households. The is done through providing social grant increases that are above inflation, expanding the basket of VAT zero-rated food items to include canned vegetables, dairy liquid blends, and organ meats from sheep, poultry and other animals,” says Godongwana.
VIDEO| Minister Enoch Godongwana’s 2025 budget speech:
