Decision on proposed R20 billion tax increases still to be made

BUSINESS NEWS - South Africans will have to wait until the 2026 Budget to find out whether the proposed R20 billion in additional tax increases can be withdrawn.

Presenting the Medium-Term Budget Policy Statement (MTBPS) at a sitting of the National Assembly at the Good Hope Chamber in Parliament, Minister of Finance Enoch Godongwana said a final decision will be announced in the 2026 Budget.

“As indicated in the 2025 Budget, an additional R4 billion was allocated to the South African Revenue Services (SARS). This allocation was intended in part to strengthen debt collection, and thereby increase revenue collected, by between R20 and R50 billion per year.

“We will continue to monitor SARS’s revenue performance for the remainder of the year. This assessment will inform whether the R20 billion in additional tax increases for the 2026 Budget, as earlier proposed, can be withdrawn,” the Minister said on Wednesday.

He said the better than estimated tax revenue, of R19.7 billion, is due to stronger household expenditure, which has boosted value-added tax collections, and improvements in corporate tax receipts and dividend tax.

“Lower than expected VAT refunds also contributed to the improved revenue outlook. This higher revenue allows us to bring forward some once-off expenditure,” the Minister said.

Adjustments

For the current year, an additional expenditure of R15.8 billion is proposed.

“Madam Speaker, the adjustment in revenue means that we can make changes to our spending estimates. Amongst the in-year adjustments is also R2 billion for the rebuilding of Parliament, and R1 billion to the Independent Electoral Commission for the 2026 municipal elections.

“In addition, the spending announced in the May Budget for the National Dialogue, as well as its carry through costs, are catered for.

“These allocations are on top of the additional funding provisions for Education and Health announced in the May Budget,” the Minister said.

Combating the illicit economy

According to SARS, since 2020, government has lost around R40 billion in excise revenue to the cigarette black market.

“The same is true for illicit alcohol and fuel. Government is clamping down on this illegal trade. In the last six months, SARS suspended three licenses for non-compliant tobacco production,” the Minister said.

He highlighted that South Africa faces a problem of illicit trade that threatens the economy, endangers consumers, and robs the fiscus of billions in revenue.

“The Financial Intelligence Centre has provided intelligence reports to SARS to assist in investigations of criminal syndicates.

“Together they have identified illicit markets in tobacco, precious metals, fuel and procurement fraud,” the Minister said.

Godongwana called on customs officials to fulfil their duty to prevent criminals from dodging taxes and flooding the markets with dangerous products. -SAnews.gov.za

‘We bring you the latest Garden Route, Hessequa, Karoo news’