Zuko Komisa
- The government is doing a better job of paying back the money it owes by spending less and saving more.
- Because they saved extra money last year, they decided not to raise income taxes for workers this year.
- Support for the “social wage” remains a priority, with 60% of spending directed toward healthcare, education, and social grants.
Finance Minister Enoch Godongwana has informed Parliament that the National Treasury’s strategy of fiscal discipline balancing reduced spending with increased revenue is yielding results.
The budget deficit is narrowing and debt-servicing costs are beginning to retreat.
While the government still faces a R432.4 billion debt repayment bill for 2026, the required borrowing is set to drop significantly to R380 billion, down from R563 billion the previous year.
Economic prospects are brightening, with growth projected to reach 1.6% in 2026.
This improved outlook, bolstered by higher-than-anticipated revenue in 2025, has allowed the government to scrap a planned R20 billion income tax hike.
For the first time since 2024, tax brackets and rebates will be adjusted for inflation, preventing “bracket creep” and ensuring citizens aren’t penalised for inflationary wage increases.
However, “sin taxes” on alcohol and tobacco, alongside fuel levies, will rise in line with inflation.
The budget also introduces measures to stimulate private savings and support small enterprises.
The annual tax-free savings limit will rise to R47,000, while the VAT registration threshold for small businesses will more than double to R2.3 million.
On the expenditure side, 60% of the R1.95 trillion budget is earmarked for the “social wage” funding education, healthcare, and grants including a R26 billion commitment to HIV/AIDS programmes over the next three years.
The grant increases are as follows:
- Old age grant will increase from R2 315 to R2 400.
- War veterans grant will increase from R2 335 to R2 420.
- Disability grant will go up from R2 315 to R2 400.
- Foster care grant rises from R1 250 to R1 295.
- Care dependency grant will increase from R2 315 to R2 400.
- Child support grant will go up from R560 to R580.
- The grant-in-aid will increase from R560 to R580.
The SRD grant will remain at R370, with payments to continue until next year.