IN THE SPOTLIGHT: THE 2025/26 BUDGET REVISION PROCESS

IN THE SPOTLIGHT: THE 2025/26 BUDGET REVISION PROCESS

• 30 April 2025
• In the Spotlight
• SA Legal Academy

A revised 2025/26 Budget review will be tabled on 21 May 2025, according to a recent National Treasury media statement. It will replace the fiscal framework introduced on 12 March 2025, and will include:

• a revised Appropriation Bill, and
• a revised Division of Revenue Bill.

A revised Rates & Monetary Amounts & Amendment of Revenue Laws Bill was formally introduced on 24 April 2024, as SA Legal Academy reported at the time.

Among other things, the media statement noted that, while the postponement of the Budget’s passage through Parliament was ‘not ideal’, the circumstances leading to that decision had:

• ‘highlighted the importance of meaningful engagement on fiscal matters’, and
• ‘provided a valuable opportunity for all stakeholders … to thoroughly engage with the complex challenge of achieving fiscal sustainability while promoting economic growth and protecting essential public services within very limited resources’.

Against that backdrop, the process of revising documents introduced on 12 March 2025 and since withdrawn will include:

• generating:
  • ‘economic assumptions using the latest available data’, and
  • updated fiscal projections
• ‘recalculating revenue projections and tax implications’
• ‘determining appropriate borrowing strategies’, and
• ‘consolidating these … into a coherent and sustainable fiscal framework’.

Until the new Budget is passed, government services – including those provided by provinces and municipalities – will continue to be funded under section 29 of the 1999 Public Finance Management Act (expenditure before the annual Budget is passed) and the 2024 Division of Revenue Act.

Respectively, these two statutes allow spending and transfers of up to 45% of the previous year’s budget allocations – albeit under specific conditions.

SA Legal Academy’s report on the VAT increase reversal includes links to subsequent announcements from:

• the South African Revenue Service (SARS) on measures to be taken by VAT vendors following the reversal of the VAT rate increase, and
• National Treasury on Finance Minister Enoch Godongwana’s consent to a recent Western Cape High Court order suspending his decision to increase the VAT rate to 15,5%.

Please click the links below for more information:

• National Treasury’s 30 April 2025 media statement
• SA Legal Academy report on VAT increase reversal (including links to the SARS statement and one from the Minister)
• Western Cape High Court order on VAT increase suspension
• Minister’s answering affidavit in a matter brought before the Western Cape High Court by the Democratic Alliance

Published by SA Legal Academy Policy Watch

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