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Godongwana Suggests SRD Grant Discontinuation Could Avoid Tax Hike
Finance Minister Enoch Godongwana has stated that a tax increase would not be necessary if the Covid-19 Social Relief of Distress (SRD) grant were discontinued. He is set to present the 2025/2026 national budget on Wednesday, following delays caused by Cabinet disagreements over a proposed 2% VAT increase to address a R60 billion shortfall.
While discussions continue about a possible VAT hike between 0.50% and 1%, the proposal has met resistance from political parties within the government of national unity (GNU). Speculation suggests the ANC might seek support from the EFF if internal negotiations fail.
In an interview with the Sunday Times, Godongwana indicated that cutting the SRD grant would eliminate the need for a VAT increase. He was quoted as saying, “If you allowed me to cut the SRD, I wouldn’t increase anything. I’m faced with increased expenditures which are not in the budget.”
Minister says South Africans must choose between VAT increases or reducing COVID-19 SRD grant
Finance Minister Enoch Godongwana has highlighted the tough fiscal decisions facing South Africa, particularly a potential choice between raising the Value Added Tax (VAT) or reducing… pic.twitter.com/SKk9tJuF42
— MDN NEWS (@MDNnewss) March 9, 2025
Godongwana explained that while the SRD grant was initially a temporary measure during the Covid-19 pandemic, its continuation would require finding a new source of funding. “If it continues, it’s not affordable; we’ll have to find a revenue source,” he added.
The minister also ruled out additional budget cuts or corporate tax increases, warning that such measures could negatively affect service delivery and economic growth.
Don’t increase VAT, even slightly – it’s anti-poor and anti-growth.
And it’s not fair to say it’s needed for the SRD, as this creates a false dilemma.
We need spend efficiency.
Godongwana reveals the budget item causing VAT hike chaos in South Africa https://t.co/N2SrcNGPwP
— Dinesh Govender (@dineshgovender) March 9, 2025
In response to the looming tax debate, the DA has proposed austerity measures instead of tax hikes, suggesting cuts in government travel and catering expenses, a hiring freeze, and a national audit of ghost employees.
The final decisions on VAT and spending cuts will be revealed in Godongwana’s upcoming budget speech.
That SRD grant must go!@CyrilRamaphosa & his thieving @MYANC cronies can fund that grant. The taxpayers are sick & tired of funding stealing by cadres. And now the few cents they have left from a salary that never increase must now be used for freebies.https://t.co/M7opWu4pyA
— Desire Tablai (@DesireTablai) March 9, 2025
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