Cape Town – Finance Minister Enoch Godongwana has presented a revised national budget (Budget 3.0), scrapping a previously proposed VAT hike and instead introducing new tax measures to raise R18 billion in 2025/26 and R19 billion in 2026/27.
A key measure includes increasing the fuel levy—by 16 cents per litre for petrol and 15 cents for diesel—from June 4, marking the first such increase in three years.
While this move helps narrow the fiscal gap, Godongwana warned that a further R20 billion in revenue will still need to be raised in 2026/27 unless SARS improves collection efforts.
The cancelled VAT increase, which would have brought in R28 billion in 2025/26, has left a significant funding shortfall.
To ease the burden on poorer households, the government will expand the list of zero-rated food items.
However, Godongwana acknowledged that abandoning the VAT hike without fully replacing the revenue will constrain the funding of new government programmes.
The revised revenue estimates show the national budget is now R61.9 billion short over the next three years.
Despite global and domestic economic challenges — including trade tensions, geopolitical risks, and lower investment — Godongwana forecast a modest economic growth rate of 1.4% for 2025, down from the earlier 1.9% projection.
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Compiled by Betha Madhomu
