Budget 3.0 to be tabled on 21 May — Godongwana confirms

Finance Minister Enoch Godongwana has confirmed that a new national budget will be presented in parliament on 21 May.

The decision to introduce a revised budget comes in the wake of government’s move to abandon the plan by the National Treasury to increase the value-added tax (VAT).

The original proposal aimed to raise VAT by 0.5% starting on 1 May 2025, followed by an additional 0.5% hike in the 2026/2027 financial year.

The plan was intended to bolster government revenue, but it faced significant public and political resistance due to concerns over the potential impact on the cost of living and economic inequality.

With the VAT hike now officially scrapped, attention has turned to how the government will address its revenue shortfalls and fund key public services.

Godongwana to table revised budget

Addressing the media on Wednesday, Godongwana reiterated that South Africa’s value-added tax (VAT) rate will remain unchanged at 15%.

“This decision was shaped not only by political debates, but importantly by the voices of South Africans. When people speak, we must also listen.

“I’m encouraged by the passion shown [because] it reflects the seriousness with which we approach the hard choices needed to place our finances on a sustainable path,” he said.

The minister confirmed that the upcoming budget would be balanced without resorting to an increase in VAT, while still maintaining key public services such as education, healthcare, and social grants.

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“We must balance the budget by managing our costs better,” Godongwana remarked.

He dismissed the possibility of raising other taxes, including corporate income tax, arguing that such a move could stifle economic growth and discourage investment.

“Borrowing more would worsen our debt crisis. We already spend more than R1 billion a day servicing debt.

“We must do more with less, review government spending critically [and] root out waste. Every cent of public money must be spent wisely.”

Watch the briefing below:

Godongwana further emphasised the importance of improving revenue collection and enhancing the capacity of the South African Revenue Service (Sars).

“We are making provision for Sars [South African Revenue Service] to collect more, particularly those who still owe Sars,” he noted.

Budget process

The upcoming budget review will include a revised fiscal framework as well as several key legislative instruments such as the Appropriations Bill, the Division of Revenue Bill, and the Rates and Monetary Amounts and Amendment of Revenue Laws Bill, which has already been tabled.

According to the National Treasury, the revised budget process will comply with all required technical and legal procedures as stipulated in the Money Bills and Related Matters Act.

READ MORE: Suspension of VAT increase ‘necessary intervention,’ Malema says

This includes formal consultations with the Financial and Fiscal Commission (FFC), dialogue with all political parties within the government of national unity (GNU), and Cabinet approval before the budget is presented to parliament.

In the interim, government operations and services will continue to be funded in line with the Public Finance Management Act (PFMA).

Section 29 of the PFMA permits the state to spend up to 45% of the previous financial year’s budget within the first four months of the current fiscal year, ensuring continuity in service delivery until the new budget is enacted.

VAT legal battle

The new budget also follows a ruling by the Western Cape High Court in Cape Town to halt the VAT hike on Sunday.

This suspension is in place until part B of the legal case filed by the Democratic Alliance (DA) is heard.

The DA is challenging Section 7(4) of the VAT Act, arguing that it is unconstitutional.

The section currently allows the finance minister to make immediate changes to the VAT rate before parliament completes the full budget process.

NOW READ: Vat legal challenge could have wider implications