BUSINESS NEWS - Delivering his third budget speech in Cape Town this afternoon, Finance Minister Enoch Godongwana told parliament seeing that the proposed increases in the VAT rate in 2025/26 and 2026/27 have been dropped, the expansion of the zero-rated basket, which was included to cushion poorer households from the VAT rate increase, falls away.

"Madam Speaker, compared to the March estimates, tax revenue projections have been revised down by R61,9 billion over the three years. This reflects the reversal of VAT increase and the much weaker economic outlook."

In lieu of this, Godongwana proposed an inflation-linked increase to the general fuel levy. 

"For the 2025/26 fiscal year, this is the only new tax proposal that I am announcing. This is the first fuel levy increase in three years."

This means that on 4 June the general fuel levy will increase by 16 cents per litre for petrol and by 15 cents per litre for diesel.

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He said that this tax measure alone will not close the fiscal gap over the medium term.

"The 2026 Budget will therefore need to propose new tax measures, aimed at raising R20 billion," Godongwana said.

Read Godongwana's full budget speech here.

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