The big winners and losers in South Africa’s 2025 budget

South African Finance Minister Enoch Godongwana cut spending and adjusted the tax mix in a revised budget presented to lawmakers on Wednesday.

This came three weeks after the nation’s coalition government rejected his initial plan. Here’s a rundown of how you may be impacted:

LOSERS

Consumers

The National Treasury will raise the value-added tax (VAT) by a 0.5 percentage point on May 1 and by the same margin on April 1 next year, which would bring the rate to 16%.

While the proposed increase is lower than the 2 percentage-point hike envisioned in the previous iteration of the budget, it still threatens to stoke inflation and deter consumer spending.

Retailers and manufacturers are among the businesses that will likely be impacted.

Individual taxpayers

To help compensate for lower-than-anticipated VAT revenue, Treasury said that personal income-tax brackets won’t be adjusted to take account of inflation.

That will leave most people with less money in their pockets, and those who earn regular salaries and can’t restructure their packages will be the most affected.

Smokers and drinkers

Godongwana proposed raising excise duties on alcoholic beverages, pipe tobacco and cigars by 6.8%, and on cigarettes and vaping products by 4.8% from April 1.

Travelers

Over the next three years, the Department of Home Affairs will be allocated R4.9 billion less than was planned in the February 19 Budget.

That will hamper efforts to digitize its systems and hire more staff. It is a setback in plans to make border posts more efficient and speed up visa issuance, passports and identity documents.

WINNERS

Infrastructure Companies

The government plans to spend R1.03 trillion on roads, water and energy projects and other infrastructure through March 2028.

That should boost demand for cement, steel and other building materials and provide work for construction and engineering companies.

The investment should make it easier to do business, bolster investment and spur economic growth.

Motorists and commuters

The Treasury intends to leave fuel levies unchanged to mitigate the inflationary effect of higher petroleum prices.

The estimated tax relief arising from the concession will amount to about R4 billion. Levies paid to the Road Accident Fund, which compensates accident victims, were also left unchanged.

Civil Servants

The government is sticking to a deal to lift state workers’ wages by 5.5% in 2025-26 and by the inflation rate over the following two years. It also retained plans to offer senior staff early retirement packages.

A proposal from the country’s biggest labour group to pause contributions to a defined benefit pension fund for state workers was rejected.

The Democratic Republic of Congo

The Treasury committed R5 billion to the military to fund a peacekeeping mission in eastern Congo, where Rwanda-backed rebels have wreaked havoc.

Many South African troops have died in the central African nation, and regional groups haven’t managed to broker a ceasefire so far.