South Africa’s Government of National Unity (GNU) has managed to pass Budget 3.0 after weeks of political back-and-forth, but the approval has come at a cost to ordinary citizens.
While the GNU avoided increasing VAT—a move that would have been deeply unpopular—it has made up for the lost revenue through other means that directly impact consumers. The most noticeable of these is a hike in the fuel levy. From June 4, petrol prices will rise by 16 cents per litre and diesel by 15 cents, placing further pressure on South Africans already struggling with rising living costs.
In addition, the government has decided not to adjust income tax brackets for inflation. This means workers will pay more in taxes as their salaries increase slightly, a quiet method of collecting extra revenue known as “bracket creep.”
The National Treasury also lowered its economic growth forecast from 1.9% to 1.4%, citing global uncertainty and local challenges. South Africa’s debt is now expected to climb to 77.4% of GDP by the 2025/26 financial year.
Reactions to the budget have been mixed. The DA praised the government for scrapping the VAT hike but raised concerns about the impact of other tax increases. The EFF slammed the budget as a betrayal of the poor, while the IFP and ActionSA voiced concerns about fuel costs and a lack of bold plans to fight unemployment and corruption.
While the GNU may consider this a political success, for millions of South Africans, Budget 3.0 represents yet another burden in already difficult times.
