Finance Minister Enoch Godongwana’s proposed 2025/2026 national budget, including fuel levy hikes, has sparked debate among parliamentary committees, with lawmakers emphasizing the need for fiscal responsibility despite public discontent.
During budget discussions, five parliamentary committee chairpersons dissected the financial plan, which includes a 15-cent per liter increase for diesel and a 16-cent per liter hike for petrol. The proposed adjustments come as the government seeks additional revenue streams amid economic pressures.
Pushback Against Anti-Tax Sentiment
Joe Maswanganyi, one of the committee chairpersons, defended the need for tax increases, warning against populist resistance.
“We should not promote a situation where we don’t want the public and corporates to pay taxes,” Maswanganyi said. “It will not be right that every time the state talks about increasing taxes, we encourage protest. You cannot run a state based on populism—no state can function without revenue.”
He cautioned that refusing to raise taxes could lead to government collapse, stressing that fiscal discipline is essential to avoid scenarios where public sector salaries go unpaid.
Controversial VAT Hike Dropped
This marks Godongwana’s third budget since taking office, but it has not been without challenges. In February, Cabinet failed to agree on a proposed 2 percentage point VAT increase. A revised March proposal for a 0.5 percentage point hike was later blocked by a court interdict.
Despite these setbacks, Songezo Zibi expressed confidence that the budget would pass, stating: “Unless something changed this morning… the parties in the Government of National Unity (GNU) will support the budget ultimately.”
Focus on Fiscal Discipline and Investment
The government’s priority is ensuring expenditure aligns with national priorities and restoring investor confidence.
“The story South Africa has to tell is that we are reviewing our spending to ensure it’s aligned with fundable plans,” he said. “If there’s one figure we should obsess over, it’s whether our gross capital formation—investment levels—is rising. Once we fix that, we can talk about job creation.” Mmusi Maimane said.
What’s Next?
With the budget now before Parliament, further amendments are expected during the appropriations process. However, the GNU’s majority likely ensures its passage, despite opposition to tax hikes.
The fuel levy increases, if approved, will add to the financial burden on consumers already grappling with high living costs. Meanwhile, the Treasury remains under pressure to stabilize finances without triggering further public backlash.