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Major Changes Coming for Social Grants in South Africa as Budget Looms

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South Africa’s social grant system could see significant changes as the government prepares to table the 2025 National Budget on 19 February. A recent high court ruling and rising public sector wages are set to increase government spending, with potential long-term implications for the country’s finances.

SRD Grant Could Become Permanent—At a Massive Cost

The Social Relief of Distress (SRD) grant, which currently provides R370 per month to about 10.5 million recipients, has long been considered a temporary measure. However, a recent court ruling has challenged this view, stating that the government cannot exclude eligible individuals simply due to affordability concerns.

This decision means that:

  • The number of recipients could rise to 18.3 million.
  • Annual costs could increase by R35 billion.
  • The grant may become a permanent feature of South Africa’s social welfare system.

The National Treasury is currently reviewing the judgment and may appeal. However, if upheld, this ruling could reshape social assistance policies in South Africa.

Public Sector Wage Increases Add to Fiscal Pressure

Adding to government spending concerns, the state has proposed a 5.5% wage increase for public sector employees. This is higher than the budgeted increase, meaning additional funds will be needed to accommodate wage adjustments.

Possible Tax Changes in 2025

To manage increased spending, the government is exploring new tax measures. While not all will be implemented, some of the proposals under consideration include:

VAT Adjustments – Expanding the number of zero-rated essential goods.
Corporate Tax Hike – Increasing the corporate tax rate to 28%.
Wealth Tax – A progressive net wealth tax on high-net-worth individuals.
Personal Income Tax (PIT) Increases – Higher tax rates for high earners.
Luxury & Estate Tax Hikes – Increased taxation on inheritance, estates, and high-end imports.
Medical Tax Credit Removal – Potential elimination of medical tax benefits.Health Promotion Levy Increase – Raising the levy on sugary beverages to 20%, with annual inflation-based increases.

These potential tax measures aim to boost government revenue while addressing wealth inequality and illicit financial flows.

Have Your Say Before the Budget is Finalized

South Africans can submit their Budget suggestions before 10 February 2025 through the National Treasury’s tip system. Suggestions are reviewed, and the most impactful ones are included in the final Budget speech.

Since its launch in 1999 by former Finance Minister Trevor Manuel, public engagement has grown, with:

  • 341 tips in 2021
  • 980 tips in 2022
  • 2,385 tips in 2023
  • 855 tips in 2024

Submissions should be concise (under 300 words) and can influence the final National Budget 2025 policies.

With the SRD grant potentially becoming permanent and a wage increase for public sector workers, South Africa’s 2025 Budget is set to be one of the most critical in recent years. Higher social spending could bring relief to millions, but it also raises concerns about fiscal sustainability and possible tax hikes.\

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