Cape Town – Finance Minister Enoch Godongwana has reportedly said that a tax increase will not be necessary if the Covid-19 Social Relief of Distress (SRD) grant is discontinued.
He is set to present the 2025/2026 national budget on Wednesday, after delays due to Cabinet disagreements over a proposed 2% VAT increase to address a R60 billion shortfall.
While some discussions continue around a 0.50% to 1% VAT hike, the proposal has faced opposition from political parties within the government of national unity (GNU).
Speculation suggests the ANC may seek support from the EFF if internal GNU negotiations fail.
In a recent interview with Sunday Times, Godongwana said that eliminating the SRD grant would remove the need for a VAT increase, The Citizen reported on Sunday.
“If you allowed me to cut the SRD, I wouldn’t increase anything. I’m faced with increased expenditures which are not in the budget,” the minister was quoted as saying.
Godongwana explained that while he had previously allowed for the SRD grant, originally a temporary Covid-19 measure, its continuation would require identifying a new funding source.
Minister says South Africans must choose between VAT increases or reducing COVID-19 SRD grant
Finance Minister Enoch Godongwana has highlighted the tough fiscal decisions facing South Africa, particularly a potential choice between raising the Value Added Tax (VAT) or reducing… pic.twitter.com/SKk9tJuF42
— MDN NEWS (@MDNnewss) March 9, 2025
“If it continues, it’s not affordable; we’ll have to find a revenue source,” he said.
He also ruled out further budget cuts or corporate tax increases, warning of negative impacts on service delivery and economic growth.
Meanwhile, the DA has proposed austerity measures instead of tax hikes, including cutting government travel and catering expenses, a hiring freeze, and a national audit of ghost employees.
The final decision on VAT and spending cuts will be outlined in the budget speech.
See what South Africans are saying on social media
Don’t increase VAT, even slightly – it’s anti-poor and anti-growth.
And it’s not fair to say it’s needed for the SRD, as this creates a false dilemma.
We need spend efficiency.
Godongwana reveals the budget item causing VAT hike chaos in South Africa https://t.co/N2SrcNGPwP
— Dinesh Govender (@dineshgovender) March 9, 2025
South Africans must reject Minister Godongwana’s false choice! Instead of raising VAT or cutting the SRD grant, cut bloated ministerial salaries & wasteful spending. The poor must not pay for government failures! #NoToVATHike #HandsOffSRD https://t.co/lbYKqne9B0
— Mayibuye Melisizwe Mandela (@Cde_MM_Mandela) March 9, 2025
That SRD grant must go!@CyrilRamaphosa & his thieving @MYANC cronies can fund that grant. The taxpayers are sick & tired of funding stealing by cadres. And now the few cents they have left from a salary that never increase must now be used for freebies.https://t.co/M7opWu4pyA
— Desire Tablai (@DesireTablai) March 9, 2025
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Compiled by Betha Madhomu
