Cabinet has expressed its backing for the proposed 2025 National Budget, emphasizing its role in sustaining the country’s economic stability. Minister in the Presidency, Khumbudzo Ntshavheni, stated that the budget’s measures are crucial to maintaining key public services, including education, healthcare, and early childhood development.
Speaking at a press briefing in Cape Town on Thursday, following a cabinet meeting held the night before, Ntshavheni highlighted that the budget would help finance essential services such as maintaining 1,000 teachers, retaining 9,300 health workers, and employing 800 community service doctors. Additionally, it aims to provide early childhood education to an extra 700,000 four-year-olds.
“The tax increases will help finance the sustainability of this country, ensuring continued investment in critical sectors,” Ntshavheni explained. The proposed VAT increase, to be implemented in two phases, was one of the key talking points during the meeting.
However, Ntshavheni assured that the budget included measures to mitigate the impact of these increases. There will be no hike in the fuel levy, and social grants will see above-inflation increases, with old age and disability grants rising by R130 to R2,315 by 2025. The budget also includes significant funding for PRASA, aimed at improving passenger rail services, which is expected to help reduce household transport costs.
Despite the government's optimism, reactions to the budget have been divided. Zwelinzima Vavi, leader of the trade union federation SAFTU, condemned the VAT hike, calling it "an insult to the working class." He argued that VAT disproportionately affects the poor, adding, "The government is telling us that it seeks to resolve all of the crises created by capitalism, mismanagement, and corruption at the expense of workers."
Similarly, ActionSA’s KZN provincial chair, Zwakele Mncwango, rejected the VAT increase, stating, "This will make the poor poorer and will not help anyone."
As the debate continues, the government remains steadfast in its belief that the budget’s long-term benefits will outweigh the short-term challenges.