By Eamonn Ryan
The 2025/26 national budget has landed with little fanfare, largely meeting expectations but failing to deliver a bold vision for economic growth.
While allocations to social grants and debt servicing were anticipated, the budget lacks the kind of decisive expenditure control measures that could have reassured investors and set the economy on a stronger growth trajectory.
Despite some infrastructure spending, skepticism remains over whether this budget can drive meaningful economic expansion. Growth projections of 3% seem overly optimistic, with a more realistic outlook hovering around 1.7-1.8%. There is little in the budget to attract foreign investment or signal a serious commitment to cutting spending beyond what was necessary to fund wage increases.
A bolder approach—one that included clear messaging on expenditure discipline and perhaps even a streamlined cabinet—could have been a positive signal to markets. Instead, the budget appears to take a cautious, predictable path, doing what was expected but not inspiring confidence in South Africa’s economic future.
The latest tax adjustments and trade policies bring a mix of surprises and concerns. While some changes, like the unexpected VAT reduction on imports and the full diesel refund for the primary sector by April 2026, provide relief, others raise questions about their long-term economic impact.
The increase in transfer duties by 10% and the continued upward trajectory of alcohol taxes—justified as a measure to curb road fatalities—have sparked debate. The effectiveness of tax hikes in reducing accidents remains uncertain, especially when certain traditional alcoholic beverages appear to be excluded from similar adjustments.
One of the most striking takeaways is the growing tax burden on individuals due to inflation-adjusted tax brackets. Over the past three years, taxpayers have effectively been paying more due to bracket creep, contributing to a significant revenue boost for the government. Without inflationary relief, the rising personal income tax, coupled with VAT adjustments, could strain consumer spending and even have an inflationary effect.
Retirement reforms were also discussed, but at this stage, they remain proposals rather than concrete policy changes. With businesses already struggling under economic pressures, the absence of meaningful fiscal relief may further challenge growth and investment prospects.
While the budget contains some rational adjustments, its overall impact suggests a heavier tax load on consumers, limited direct incentives for trade growth, and a missed opportunity to introduce broader economic stimulus measures.