Budget 2026 cushions taxpayers before the polls

The Organisation Undoing Tax Abuse (OUTA) says the 2026 Budget avoids major tax shocks and offers measured relief to taxpayers and small businesses in the same year as local government elections, but stops short of the decisive reform South Africa urgently needs.

“These measures provide breathing room for households and entrepreneurs under pressure,” says Wayne Duvenage, OUTA CEO. “Small businesses remain the real drivers of job creation, and supporting them makes economic sense.”

However, the timing raises legitimate questions.

“It is notable that significant tax relief and grant adjustments, which should have been introduced years ago, arrive in the same year that voters head to the polls,” says Duvenage. “If fiscal space exists today, the question is why similar relief was not prioritised earlier when households and businesses were under equal pressure. Sustainable reform should not depend on the electoral calendar.”

The relief is partly offset by increases in fuel levies. The general fuel levy rises by 9 cents per litre for petrol and 8 cents for diesel. The carbon levy increases by 5 cents for petrol and 6 cents for diesel. The Road Accident Fund (RAF) levy rises by 7 cents per litre for both. The combined effect is a 21-cent per litre increase for petrol and diesel. “Fuel levies are often presented as technical adjustments, but they affect the entire supply chain, from food prices to transport costs,” says Duvenage.

OUTA is particularly concerned about the continued increase in the RAF levy.

“The annual fuel levy for the RAF contributes over R45 bn per annum, which falls well below the long-term provisions for the fund at R387.4bn, and is expected to increase to R426.2bn by 2028/29. Increasing the levy by a further R1,5 bn per annum, without fixing the structural failures of the RAF, simply shifts the burden to motorists while liabilities continue to grow,” says Duvenage. “South Africans are paying more into a system that remains fundamentally broken.”

OUTA welcomes the additional R1bn allocated to tackle organised crime, illicit mining, and economic sabotage. Funding for the judiciary is also set to increase, with R687m over three years allocated to boost capacity; however, this is not enough and signals Government’s reluctance to take the fight against corruption and criminal syndicates more seriously than it does.

“Improved allocations to boost the performance of prosecutions, asset recovery, and real consequence management will do more for investor confidence and service delivery than any number of well-intended policy speeches,” says Duvenage. “Corruption is not only a moral issue. It is a direct economic risk.”

OUTA remains concerned at the extent of South Africa’s gross loan debt, which remains around 78.9% of GDP in 2025/26. Outstanding tax debt stands at R646bn, of which R518.2bn is undisputed. SARS collected R79.4bn by January, falling R15bn short of target.

OUTA welcomes Treasury’s acknowledgement that diverting utility revenue away from maintenance has contributed to infrastructure collapse in metros, but this has been common knowledge for decades now. Treasury’s R27.7bn performance-linked reform programme for metro trading services aims to enforce ring fencing of electricity, water, sanitation, and waste revenues; however, we don’t see any plans to ensure Metros and Municipalities address these maintenance allocations going forward.

“Municipal revenue must be better utilised for maintenance and improving those services, as opposed to unrelated municipal budget holes, bonus and corrupt procurement practices,” says Duvenage. “Ring fencing electricity and water revenue is a necessary step for now, but must be seen as a bail-out for failing ANC-led municipalities.”

Over R1tn in public-sector infrastructure spending is planned over the medium term. While this scale is significant, OUTA cautions that infrastructure budgets remain vulnerable to corruption, weak project management, and organised criminal interference.

“This is less about new interventions and more about fixing what should never have been broken in the first place. Infrastructure funding without consequence management risks repeating past failures,” says Duvenage.

The Skills Development Levy remains at 1% of payroll, with billions flowing annually into SETAs. Yet youth unemployment remains unacceptably high, and governance failures to curb maladministration and corruption in the SETAs continues unabated.

“The Minister speaks about exploring a dual training system, but this does not address the deeper governance failures within the SETA framework,” says Duvenage. “If business is compelled to fund skills development, every rand must be traceable. Boards must be properly vetted and professionally appointed. Performance must be measurable and made public. Irregular expenditure must trigger consequence management.”

OUTA supports the need for a total revamp of the SETA system and a model that allows business to take greater responsibility in investing SDL funds locally to upskill communities and build future employees, while strengthening oversight and transparency.

“This budget cushions taxpayers in the short term,” concludes Duvenage. “But South Africa does not need short-term comfort. It needs long-term higher economic growth, a wider tax base, greater accountability, structural reform, and consistent consequence management. Without these, fiscal stability will remain fragile.”

South Africa does not need better messaging. It needs enforcement, transparency, and consequence management. That is where OUTA’s attention remains.

A soundclip is available here in English and here in Afrikaans.