2025 Budget Speech Summary
Finance Minister Enoch Godongwana delivered South Africa’s 2025 National Budget Speech on March 12, 2025. The 2025 Budget Speech wasn’t as harsh as many feared, especially with rumours of a 2% VAT hike swirling around. Here’s a quick rundown of the main tax points:
Economic Growth
The economy grew by only 0.6% in 2024. Looking ahead, GDP growth is projected to average 1.8% from 2025 to 2027, with forecasts of 1.9% in 2025, dipping to 1.75% in 2026, and back up to 1.9% in 2027. businesstech.co.za
VAT Changes
Instead of a 2% jump, VAT will go up by 0.5% in both the 2025/26 and 2026/27 tax years, bringing it to 16% over the next two years. These hikes kick in on May 1, 2025, and April 1, 2026, respectively. wylie.co.za
To ease the blow for low-income households, there’s talk of adding more items to the list of zero-rated essential foods.
Sin Taxes
Expect to pay more for your vices: alcohol taxes are going up by 6.75%, and tobacco products (including vaping) by 4.75% in 2025/26.
Fuel Levies
For the fourth year running, the general fuel levy isn’t changing. However, the carbon fuel levy is rising by 3 cents, making it 14 cents per liter for petrol and 17 cents for diesel.
Transfer Duty
While transfer duty tax rates stay the same, the monetary thresholds are getting a 10% bump to keep up with inflation.
Anti-Avoidance Measures
The government plans to tighten rules around third-party backed shares and hybrid equity instruments to close loopholes. wylie.co.za
Where is the government spending your money?
With all this additional tax revenue, where is the government putting it?
Grants:
- Social grants will rise above inflation (5.9%) to help the poorest South Africans cope with VAT increases.
- The R370 Social Relief of Distress (SRD) grant is extended until March 2026, with R35.2 billion allocated towards the grant.
- For comparison, the February budget initially allocated R23 billion for social grant increases—but in the revised budget, this was slashed to R8.2 billion.
- The old age and disability grants will increase by R130 to R2 315 in April.
- The Child Support Grant will increase by R30 to R560 per month.
- The foster care grant will increase by R70.
Infrastructure:
- The government has set aside over R1 trillion for infrastructure investment over the next three years.
- Roads: R402 billion
- Energy: R219 billion
- Water and sanitation: R156 billion
According to explain.co.za the government has trimmed some spending plans to make up for the revenue shortfall from the smaller VAT increase. The total reduction in non-interest government spending over the next three years amounts to R31 billion, which includes:
- A smaller increase in social grants compared to the February budget.
- A reduction in allocations for government departments.
- No additional funding for health to offset cuts to US support for HIV programmes
If you need to get your finances in order for the new year, apply for any of our various financial services on uApply.
