Changes to the 2025 National Budget might be made

South African Finance Minister Enoch Godongwana may have to make changes to the national budget after parties that control more than half the seats in parliament rejected his plans to raise taxes. 

On Wednesday (12 March), the National Treasury proposed hiking value-added tax by 1 percentage point by mid-2026, increasing levies on alcohol and tobacco, and not adjusting tax brackets to account for inflation. 

The revenue and expenditure plan won backing from the African National Congress, the largest political party, the Inkatha Freedom Party, GOOD and the Patriotic Alliance.

But the Democratic Alliance, uMkhonto weSizwe Party, Economic Freedom Fighters, Freedom Front Plus and three smaller parties that jointly have 201 of the 400 seats in the legislature said they will vote against the measure unless amendments are made. 

Lawmakers in South Africa typically vote along party lines. Some smaller parties haven’t taken a position on the budget or weren’t immediately available for comment.  

The DA, which is the second-biggest party and forms part of South Africa’s ruling coalition, wants the Treasury to do more to revive economic growth and commit to a comprehensive spending review within a specified time frame, according to its leader, John Steenhuisen.  

Godongwana has indicated he’s prepared to make concessions but said differences over the budget need to be resolved at a political level as those discussions fall beyond the Treasury’s purview.

He said the DA objected to the budget because it suffered a number of recent political losses, including failing to block the declaration of a new land expropriation law.  

“Rejecting a budget on its own is not a problem. What is a problem” is how the DA has gone about it, he said at a post-budget event hosted by media company News24 on Thursday.   

The budget will be interrogated by parliamentary committees whereupon lawmakers will debate allocations made to the various government departments and entities before the National Assembly votes on whether to approve it in May.

That should leave sufficient time for a compromise to be reached that leaves the ruling alliance intact.  

“While the DA is using the budget process as leverage to extract concessions, it currently has no intention of leaving the government,” said Amaka Anku, head of risk advisory service Eurasia Group’s Africa practice. “That limits the threat to the stability of the government.”