Cape Town, South Africa [12 March 2025] – In response to Finance Minister Enoch Godongwana’s 2025 Budget Speech, we express concern that despite a second chance at the Budget Speech, the Minister yet again failed to prioritise investment in the majority of those residing in South Africa.
While it would be expected that we should be grateful for the social grant increases, and the extension of the Social Relief of Distress (SRD) Grant, it begs the question whether it is enough of a buffer to counter the VAT increase of 0.5% increase which disproportionality affects the poor.
Grants serve as a vital lifeline for millions of South Africans facing economic hardship. While we note the increases of grants above the inflation rate, it is important to highlight that the Child Support Grant continues to be below the Food Poverty Line of R796 and the value of the SRD Grant has not been increased, with a limited budget allocation which does not speak to the reality of the unemployment crisis in South Africa. This is deeply concerning, as it means that recipients of these grants are still unable to meet their most basic nutritional needs, exacerbating food insecurity and poverty.
The VAT increase signals a troubling backtrack on the government’s social contract with its people, particularly given the already high cost of living. We believe that the Minister has run out of ideas on how to generate the necessary revenue for national development, and resorting to a VAT hike is a short-sighted solution that will only exacerbate inequality and hardship for millions of South Africans.
We categorically do not support any form of VAT increase, as it places an unfair burden on those who are already struggling to make ends meet. Instead, we urge the Minister and members of the GNU to explore alternative, progressive tax reforms that target wealthier individuals and corporations, who have the capacity to contribute more to the country’s fiscal needs.
This budget is a case in point following a strategic engagement hosted by Black Sash with the National Planning Commission and the International Labour Organisation where we amplified that the South African government must recognise its constitutional obligations and international commitments to provide a basket of services for a decent standard of living with dignity. Instead of fiscal consolidation, the Minister of Finance must consider social spending on social services and providing income security as an investment which will ultimately lead to economic growth and alleviate poverty.
We call on Finance Minister Godongwana to reconsider this regressive tax increase and to commit to a more equitable and inclusive approach to revenue generation, which includes meaningful job creation initiatives, providing sustainable livelihoods for millions of South Africans/those residing in South Africa. Additionally, we demand clarity on the future of the SRD grant and reaffirm our call for the introduction of a Basic Income Support Grant as part of a broader commitment to social and economic justice.
For further information or inquiries, please contact Oliver Meth, National Communications & Media Manager on 068 352 9045 or email oliver@blacksash.org.za
Issued by: Black Sash
