South Africans must brace themselves for the possibility of another tax hike as the economy of the country continues to under perform. This was said by Finance Minister, Enoch Godongwana during his Medium Term Budget Policy at the Cape Town City Hall today.

The Minister said tax hikes will be announced soon to raise an additional R15 billion in revenue. According to Godongwana, the hikes come as a result of the country's underperforming and soaring debt levels which are likely to result in an increase in taxes in the next financial year. "Unfortunately, since February, the risks to the economy that we warned about, including the decline in global commodity prices that granted us substantial revenue last year, elevated inflation and the Rand depreciation, have materialised. As a result, our public finances are significantly weaker," he said. He added that the government is projecting expenditure of R7.4 trillion over the next three years while the country's Gross Debt will rise from R4.8 trillion in 2023/24 to R5.2 trillion in the next 2024/25 financial year. "The main budget deficit has increased by R54.7 billion compared with the 2023 budget estimates. This reflects lower revenue performance, higher wage bill costs and higher projected debt-service costs. Revenue collection is expected to be R56.8 billion lower than forecast in the main budget in February," Godongwana said. He said that SARS will continue its focus on enforcing compliance in areas such as debt collection, fraud prevention, curbing illicit trade, voluntary disclosures, and encouraging honest taxpayers to comply voluntarily.  

Godongwana gave relief to the unemployed, extending the R350 Social Relief of Distress grant to March of 2025. R34 billion is allocated to extend the grant by another year. The Minister has, however, said the government has not found a long-term solution to funding the grant. The grant was introduced in 2021 during the peak of COVID-19 to provide relief to the unemployed during the lockdown. "Since then, fiscal space has declined markedly, reducing the scope for extension without additional financing," he said, adding that over the medium term, a provisional allocation is retained while a comprehensive review of the entire social grant system is finalised.