The Budget Speech that could break or make South Africa: What’s at stake?

All eyes will be on Finance Minister Enoch Godongwana as he delivers his much-anticipated budget speech on 12 March. 

With the cancellation of last month’s Budget Speech still fresh in the public's mind, speculation is rife of potential tax hikes, especially a 2% VAT increase.

As experts and economists weigh in, the nation braces for what could be a make-or-break announcement for South Africa's fragile economy.

Economist Ulrich Joubert said, "The economy can’t afford any tax increases. Even the sin taxes must be reconsidered." 

He stressed that the government should focus on controlling expenditure rather than looking for ways to increase revenue through taxes. 

"There is plenty of room to cut expenditure, starting with the number of cabinet ministers and the assistance we provide. It would send a strong message if the government starts at the top and demonstrates that they are serious about controlling costs."

Economist Dawie Roodt echoed this sentiment, stating, "The bottom line is simple: the state has been borrowing too much money. 

“The debt has been going up too fast, and the interest on that debt just keeps on rising. We cannot borrow more money. That is just a given." 

Roodt firmly rejected any idea of raising taxes, arguing, "This economy cannot afford another tax increase. It doesn’t matter which tax it is. This economy has been overburdened by too many taxes for far too long."

Joubert also emphasised the need for economic growth. "We need to create an environment in which the economy can start growing. Not at 0.6%, but at much better rates.

"A 2% growth target is manageable, even 3% would be better," he said. "The key is creating a growth-friendly environment so that we can start creating jobs."

Roodt said, "The only way to fix the budget is to spend less money. Politicians must spend less money. There is ample space to make cuts. 

“For example, civil servant salaries have been increasing above inflation for years, and many government departments, like Small Business Development and Women and Children, could be closed to save unnecessary spending." 

He added that eliminating wasteful expenses, like the use of blue light brigades, would also be a good start in demonstrating fiscal responsibility.

There is also a concern that a potential VAT increase would pose a significant risk for vulnerable sectors like shelters for abused women and children. 

The National Shelter Movement of South Africa (NSMSA) warns that a VAT hike could make an already severe gender-based violence (GBV) and femicide crisis even worse.

"A 2% VAT increase will affect so many elements of our services that we may be forced to reduce the number of beneficiaries we take in because everything will go up," said the Nisaa Institute for Women’s Development.

"GBV shelters have, for nearly two decades, been crying out to government for help, but decisions like this—sending the cost of living through the roof—make it seem like our cries are falling on deaf ears."

The NSMSA, which supports over 100 shelters, plays a crucial role in offering safe spaces, legal assistance, counselling, and restorative services for victims of domestic and intimate partner violence.

Dr Zubeda Dangor, Head of Executive at NSMSA, said, "Government must recognise that its responsibility to provide shelter for abused women and children is just as important as providing social grants to the elderly or children with unemployed parents."

She highlighted the ongoing underfunding of GBV shelters, which have long struggled with delayed government payments. "When we request funding, it is never for excess but only to meet the urgent needs of survivors who rely on us for safety, healing, and a chance to rebuild their lives," Dangor said. 

"This chronic underfunding deepens the financial strain and creates a lot of uncertainty, threatening essential services and taking an emotional toll on shelter staff."

tracy-lynn.ruiters@inl.co.za

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