South Africa’s 2025 Budget winners and losers

The biggest winners in Finance Minister Enoch Godongwana’s 2025 Budget were South African consumers, the Democratic Alliance, and bond investors.

The biggest losers were motorists and commuters, the Passenger Rail Agency of South Africa, welfare-grant recipients, travellers, school pupils, teachers, and doctors.

Godongwana delivered his 2025 Budget 2025 on Wednesday, 21 May 2025. This was his third attempt at laying out South Africa’s financial framework for the year.

The key change is that it does include the widely rejected VAT hike. This is in line with the minister’s commitment to maintaining it at 15%.

The latest budget withdrew the VAT rate increases and zero-rating proposed in the March 2025 Budget Review.

The latest budget proposes a few tax measures to raise R18 billion in 2025/26 and provide R1 billion in tax relief in 2026/27.

No adjustment is made to personal income tax brackets and rebates, which means more tax will be collected through bracket creep.

There is an inflationary increase in the general fuel levy, which will raise petrol and diesel prices.

There are above-inflation increases in excise duties on alcohol and tobacco products, also known as sin taxes.

The National Treasury further projected economic growth of 1.4% in 2025, up from 0.6% in 2024. This reflects the weaker-than-expected GDP outcome in the second half of 2024.

There is also a deteriorating economic outlook in both the domestic and global environments, which has caused the lower GDP growth projection.

“The fiscal strategy remains on track so that the government spends less on debt-service costs and more on critical public services,” Godongwana said.

Total consolidated spending is expected to grow at an average annual rate of 5.4 per cent, from R2.4 trillion in 2024/25 to 2.81 trillion in 2027/28, with the lion’s share going to the social wage.

Significant reforms to state spending and the budget process are under consideration, including the implementation of savings identified from the spending reviews.

2025 Budget winners

South African consumers are winners as the National Treasury reversed plans to raise the value-added tax after objections from within the country’s governing alliance.

The concessions should help contain inflation and increase consumer spending, a boon for retailers and manufacturers.

The Democratic Alliance is another winner as the party that led the fight against the VAT increase, going so far as to challenge it in court.

Its success in overturning the hike will please voters and prove that it wields real clout within the government.

Bond investors are also winners. The Treasury anticipates borrowing to be slightly less over the next three years than previously projected, which should support government bonds.

2025 Budget losers

Motorists and commuters are losers as the Treasury raised levies on petrol by 16 cents per litre and on diesel by 15 cents a litre.

This was needed to help offset lost revenue from the withdrawal of the VAT rate increase. A recent drop in international oil prices should help blunt the impact.

The Passenger Rail Agency of South Africa is another loser. The March budget earmarked R19.2 billion over three years to fund a turnaround at the beleaguered commuter rail company.

That allocation has now been cut to R12.3 billion, part of an effort to reduce spending.

Welfare grant recipients will also suffer as the Treasury will not increase the monthly stipends paid to pensioners and other vulnerable people by more than inflation.

The plan, aimed at shielding them from higher consumption taxes, has been scrapped, saving the government R6.6 billion over three years.  

Travellers, school pupils, teachers, and doctors are losers as the home affairs department’s three-year budget for a digitisation program was cut by R2.3 billion.

This is a setback for its efforts to improve the efficiency of the process of obtaining identity documents, passports, and other documentation.

The education department’s three-year budget to expand access to early childhood development and compensate employees at the provincial level was reduced by R9.5 billion.

An allocation to the health department that was earmarked for salaries, hiring unemployed doctors and buying supplies was slashed by R8.2 billion.