By Lehlohonolo Lehana.
Cabinet has concluded a process of providing input for the annual budget, which Finance Minister Enoch Godongwana will present to Parliament on March 12, the presidency said.
Government ministers held a special meeting on Monday to discuss the “best possible options, under the circumstances,” to fund the 2025-26 and medium-term plan, the presidency said in a statement on Tuesday.
A team led by Deputy President Paul Mashatile and supported by the National Treasury presented a variety of options that were considered by the cabinet, it said.
The documents indicated that the revenue was required to close the gap left by lower-than-forecast revenue collections in 2024/25, as well as to fund early childhood development, retain teachers and other frontline workers, revitalise commuter rail and cover an expansion of the Social Relief of Distress Grant as required by a recent court ruling.
Under the proposal, government would achieve its goal of stabilising the debt-to-GDP ratio at 76.1% in 2025/26.
The cabinet mandated Godongwana to select from those options in a manner that takes into account South Africa’s fiscal constraints, mitigates the impact on poor and middle-income households, and supports economic growth, it said.
Several coalition government partners had previously rejected the now-abandoned budget’s proposal for VAT to jump from 15% to 17%. However, now, one of the main options currently on the table is a VAT increase of 0.75 of a percentage point.
The Democratic Alliance (DA) is still against any form of a VAT hike.
Another option is the possibility of increasing the fuel levy by inflation, or the DA’s suggestion of payment holiday of employer contributions to the Government Employees Pension Fund, which would save the Treasury more than R60 billion for the financial year 2025/26.