Budget Expectations: Growth, Debt Containment, and No New Taxes

Dear Editor

“The DA strongly opposes any tax increases and does not support increases to personal income tax, corporate income tax and value added tax.”

The Democratic Alliance believes that the 2025 Budget must be a turning point for our economy and demonstrate a commitment to serious, fast tracked reforms towards growth. After a decade of sluggish growth and an unsustainable debt burden, the 2025 budget must be built on the best ideas from within the GNU, as South Africa cannot afford more of the same.

The DA therefore expects that the 2025 budget must focus on unlocking infrastructure investment, policy reform that results in private sector job growth, and improve efficiency through structural reforms.

The DA strongly opposes any tax increases and does not support increases to personal income tax, corporate income tax and value added tax. We are deeply concerned by reports in the Sunday Times that tax increases may be tabled.

The cost of living crisis over the last several years has squeezed households, many of whom are struggling to put food on the table. Even COSATU has warned against hikes to income tax and VAT. Any tax increases will face widespread resistance—not only from parliament but also from within the Government of National Unity.

Furthermore, the DA has, for the last four years, called on the government to take measures to alleviate the cost of living crisis, including reform to fuel levies, and a major expansion of the zero rated VAT basket to enable lower transport costs and better nutrition.

The government must use the opportunity presented by the budget to announce specifics and timelines on the following urgent pro-growth reforms:

• Driving Economic Growth
  • Ports and Rail

• • • Announce further port concessions, particularly in Cape Town, Richards Bay and Port Elizabeth, with clear timelines to improve efficiency and reduce costs.
    • Concession specific freight rail lines to private operators to both increase capacity and lower transport costs.
    • Commit to devolving passenger rail services to capable provinces, with a binding implementation timeline.

• • Energy Reform

• • • Set a definitive date for a competitive energy market, granting private producers full access to the grid and enabling market-driven electricity pricing.

• • Tariff Reform

• • • Multiple critical manufacturing inputs are subject to a stringent tariff regime, making manufacturing in South Africa uncompetitive. A major review of the tariff regime needs to be completed to drive manufacturing and export growth urgently.

• Boosting Investor Confidence

• • Comprehensive Red Tape and Regulatory Review of the State

• • • Undertake a full review of red tape and regulation across government to eliminate frictional costs to the economy, eliminate unnecessary bureaucracy that slows investment, lowers costs, and remove delays that hinder business growth.

• • Equity Equivalence To Attract Investment

• • • The state needs to move to a system of equity equivalence in key sectors such as ICT in order to attract stronger FDI inflows and create jobs, while benefitting local communities through upliftment programmes and other such initiatives.

• Ensuring Fiscal Responsibility
  • Comprehensive Spending Review

• • • Conduct a comprehensive spending review to eliminate waste while protecting essential services.
    • Implement meaningful expenditure reforms in the 2025 Medium-Term Budget Policy Statement and the 2026/27 Budget.

• • Fiscal Rules

• • • The state must commit to a clear process and timeline to implement a fiscal rule that will ensure all future budgets are based on a clearly defined target to contain government debt, so that we both reduce debt-to-gdp, as well as prevent a runaway debt spiral.

• • Comprehensive, Government Wide Ghost Employee Audit

• • • Past employee ghost audits in the state, in Gauteng, Limpopo and PRASA has unearthed thousands of ghost employees earning a salary from the state, and it is time that this is implemented across the state to find and eliminate this wasteful expenditure.

• • No Further SOE bailouts

• • • Bailouts to failing SOEs have driven excessive borrowing and debt, leading to a situation where debt service costs are crowding out critical investment spending and resulting in shortfalls to education, healthcare, and other critical functions. It is time to declare the end of SOE bailouts and force SOEs to stand on their own, or face privatization where they fulfil a critical function, or closure if they do not.

The DA is of the view that South Africa has a spending and growth problem. The state needs to act with a duty of care to its citizens by alleviating their financial burdens and delivering sustainable private sector jobs to the unemployed.

The DA expects the Minister of Finance, Mr Enoch Godongwana, to use this opportunity to accelerate economic reforms that drive investment, create jobs, and reduce debt.

The DA will fight against any tax increases and push for a budget that prioritizes sustainable growth and financial responsibility.

Regards

Dr Mark Burke MP
DA Spokesperson on Finance