Ahead of the 2025 Budget Speech, civil society organisations have called on President Cyril Ramaphosa to censure the Minister of Finance for his comments on the R370 Social Relief of Distress (SRD) grant.
At the weekend, the Sunday Times reported that Godongwana insists there is a need to increase VAT because the SRD grant, which has close to 10 million recipients, requires an unplanned budget allocation.
The Budget Speech, which Godongwana was expected to table on 19 February, was postponed due to the proposed two percentage point increase in VAT, which many political parties, including those in the ANC-led Government of National Unity (GNU), rejected.
BUDGET SPEECH 2025: GODONGWANA ACCUSED OF PITING THE POOR AGAINST EACH OTHER
Following Godongwana’s comments, in a joint statement, civil society organisations including Black Sash, the Economic Institute for Economic Justice and #PayThe Grants said it is categorically untrue that the SRD grant is not in the budget.
The organisations said the Director-General at National Treasury, Duncan Pieterse confirmed to the Parliamentary Finance Committee on 31 October 2024 that the SRD grant was “included as a provisional allocation in the fiscal framework’s baseline” for 2025/2026, meaning it is budgeted for, and it has been in the budget for the past five years. It is by no means a new or unanticipated expense.
“What Minister Godongwana’s remarks amount to is an ultimatum: Choose between cuts to basic services like health and education, a significant hike in living costs (via VAT), or the life-saving SRD grant. In each scenario, it is the poorest that are being asked to make an impossible sacrifice.
“As our organisations have repeatedly submitted—these are not our only options. There are better, fairer, and much less destructive alternatives. These include building the state’s capacity to collect existing taxes—as SARS Commissioner Edward Keiswetter has called for; drawing further on the Gold and Foreign Exchange Contingency Reserve Account; removing unnecessary tax breaks and subsidies which benefit the wealthy such as retirement fund contribution rebates and corporate tax incentives; raising VAT on luxury goods; reversing the Corporate Income Tax rate cut, from 27% to 28%; dealing with unnecessary and wasteful expenditure; and implementing a wealth tax. None of these options are completely frictionless—but they are effective and much, much less painful than increasing the VAT burden,” the organisations said.”
GODONGWANA ACCUSED OF MISLEADING THE PUBLIC
Further, the organisations said given the myriad available pathways, holding these unacceptable choices over people’s heads is fundamentally misleading and dishonest.
“We must see the Minister’s comments over the weekend for what they are, a last-ditch attempt to preserve his campaign of austerity by ransoming the SRD grant and the livelihoods and dignity of those who benefit from the grant, to force through an unpopular and anti-poor tax increase.
“Politicians must be held accountable for their actions, and any Minister who pre-empts democratic policy processes to impose their preferred path by misleading the public and threatening the rights of the most vulnerable has abused their office and the trust we place in them. The President must ensure that the Minister of Finance shows due regard for democratic processes and mandates, and is appropriately censured. The government as a whole must end the era of impunity for National Treasury, which, together with the Minister of Finance, must not be allowed to act unilaterally and defy the collective will of government,” they added.
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