Budget offers 'no surprises', but fuel levy set to increase

WHILE there were no serious surprises in Finance Minister Enoch Godongwana's Budget speech yesterday, an inflation-linked increase to the general fuel levy was announced, which will impact fuel prices.

- MAYIBONGWE MAQHINA and THAMI MAGUBANE

Godongwana delivered the Budget speech, in his third attempt, during a joint sitting of Parliament yesterday.

He confirmed that VAT (Value Added Tax) will remain at 15%. The issue of a VAT hike saw the Budget stalled in February, and a second attempt to introduce the increase in the Budget tabled in March was halted by court action by the DA and EFF.

However, Godongwana explained that the lack of a VAT increase had "significantly reduced our ability to fund additional government programmes and projects".

The minister, however, said the budget supported sustainable finances, the social wage and investments in economic growth.

"This is not an austerity budget," he said.

Godongwana also said the Budget was redistributive because it directed 61 cents of every rand of consolidated and non-interest expenditure towards the social wage.

"This is the money that will be spent to fund free basic services like electricity, water, education, healthcare, affordable housing as well as social grants for those in need. This budget invests over R1 trillion in critical infrastructure to lift economic growth prospects and improve access to basic services."

He noted that the budget was crafted in a manner that did not compromise the fiscal strategy of sustainable public finances.

"We have achieved this difficult balance by reducing additional spending over the medium term by R68 billion. These reductions are primarily aimed at provisional allocations not yet assigned to votes. Simply put, this means baseline allocations across all spheres of government remain largely unchanged."