As Winston Churchill once said, “…for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
Yesterday the Minister of Finance delivered the 2025 Budget Speech, following the unprecedented cancellation of February’s Budget due to no agreement reached between the players of the government of national unity (GNU). According to Roelie van Reenen, supply chain executive at Beefmaster Group, the 2025 Budget was disappointing as it failed to meaningfully address the economic growth South Africa so desperately needs.
“Taxing the nation is not a sustainable solution. We need incentives that encourage entrepreneurship, support business growth, and attract international investment. Economic growth is driven by incentivisation, not taxation,” says van Reenen.
He notes that the Budget does little to address the imbalance in South Africa’s tax system, where 7,9 million personal income taxpayers are supporting 28 million grant recipients—“a model that is simply not viable in the long term.”
Among the key tax policy proposals is a gradual increase in the value-added tax (VAT) rate, rising by 0,5% annually over the next two years, reaching 16% by 2026/2027. Additionally, no inflationary adjustments were made to personal income tax brackets, a move critics argue will push more taxpayers into higher tax brackets due to salary increases—commonly referred to as “bracket creep.” These and other measures are expected to generate approximately R28 billion in additional revenue for 2025/2026.
At the same time, the government has announced efforts to mitigate cost-of-living pressures by expanding the list of VAT zero-rated food items to include canned vegetables, dairy liquid blends, and organ meats from sheep, poultry, and other animals.
“This is not a broad economic incentive for the whole country; it is a plaster for the poorest of the poor. Those shouldering the tax burden will see little benefit from these measures,” says van Reenen. “In addition, while we do support red meat products being put on the zero-rated VAT list, specifying organ meats creates enforcement challenges. We look forward to further clarity on its implementation.”
However, van Reenen says there is one significant positive takeout from the proposed Budget: it must still be approved by the members of the GNU before becoming law.
“For the first time in years, there is no unilateral decision-making in government. All participating parties have a say in what is best for the country. This is democracy in action, ensuring that the interests of all South Africans are represented,” he concludes.
