Finance Minister Enoch Godongwana unveiled his 2025/2026 Budget on Wednesday, after a delay last month due to internal conflicts within the Cabinet concerning a proposed 2% increase in value-added tax (VAT). This delay led to ongoing discussions and disagreements before the presentation of the fiscal plan.
Background to the VAT Hike
Ahead of his budget speech, Godongwana pointed to the R370 Social Relief of Distress (SRD) grant as the primary reason for the proposed VAT hike.
The SRD grant, which was introduced as a temporary measure during the Covid-19 lockdown, has been extended several times due to ongoing economic challenges. The finance minister suggested that if the SRD grant were reduced, he wouldn’t have needed to propose the VAT increase.
“If I were allowed to cut the SRD, I wouldn’t have had to raise taxes,” Godongwana explained in an interview with the Sunday Times. He further emphasized the challenge of increased expenditures that were not originally accounted for in the budget.
Extension of the SRD Grant
In a move to provide additional support to SRD grant recipients, Godongwana extended the grant in its current form for another year, until the end of March 2026. A substantial R35.2 billion has been allocated to sustain this relief.
Allocation for Sassa Grants
Godongwana also allocated R284.7 billion for permanent social grants for the year 2025/26. This allocation includes various grant increases, which will come into effect in April 2025. The increases are as follows:
| Grant Type | Current Amount | Increase | New Amount |
|---|---|---|---|
| Old Age and Disability Grants | R2 185 | R130 | R2 315 |
| Child Support Grant | R530 | R30 | R560 |
| Foster Care Grant | R620 | R70 | R690 |
These adjustments are aimed at providing additional financial support to vulnerable groups across South Africa.
In his 2025/2026 Budget speech, Finance Minister Enoch Godongwana made pivotal decisions regarding the SRD grant and social grants.
By extending the SRD grant until 2026 and implementing increases in various social grant categories, the minister aims to address the ongoing financial needs of South Africa’s most vulnerable citizens.
While the proposed VAT increase remains a contentious issue, these measures signify a concerted effort to support the country’s socio-economic recovery.
FAQs
What is the SRD grant?
The Social Relief of Distress (SRD) grant was introduced during the Covid-19 lockdown to provide temporary financial assistance to vulnerable individuals. It has since been extended multiple times due to ongoing economic pressures.
How much will the SRD grant be extended by?
The SRD grant will be extended until March 2026, with a total of R35.2 billion allocated to support it.
What are the new amounts for social grants starting April 2025?
The new social grant amounts from April 2025 will be as follows:
- Old Age and Disability Grants: R2 315 (an increase of R130)
- Child Support Grant: R560 (an increase of R30)
- Foster Care Grant: R690 (an increase of R70)
Why was there a delay in the budget presentation?
The budget was delayed due to disagreements within the Cabinet over a proposed 2% VAT increase.
