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Image: OUTA
Budget 2026 must prioritise discipline over new taxes
OUTA urges Treasury to deepen spending reform, tackle corruption and reduce exposure to failing entities
• South Africa’s fiscal pressure must be addressed through spending reform, not higher taxes
• OUTA calls for urgent review of the Skills Development Levy and SETA system
• Bailouts and municipal mismanagement continue to drain taxpayers
• Treasury must tie funding to accountability, enforcement and measurable outcomes
The Organisation Undoing Tax Abuse (OUTA) has submitted its recommendations to the Minister of Finance ahead of the 2026 National Budget, urging Treasury to entrench reform rather than shift additional burdens onto already stretched households and businesses.
OUTA says last year’s decision not to proceed with a broad-based 2% VAT increase demonstrated that credible alternatives to regressive taxation exist. The October 2025 Medium-Term Budget Policy Statement (MTBPS) reinforced this approach, showing that expenditure restraint, curbing low-impact programmes, and improved SARS revenue collection can materially ease fiscal pressure.
“South Africa does not have a revenue problem. We have a spending discipling and accountability problem,” says Wayne Duvenage, CEO of OUTA. “The answer cannot be to reach deeper into taxpayers’ pockets while waste, inefficiency and corruption continue unchecked.”
OUTA’s submission focuses on six core areas:
Spending reform and discipline
Sustainable fiscal consolidation will come from stronger oversight, disciplined expenditure, and eliminating wasteful and patronage-driven spending. Treasury must expand efforts across municipalities, departments and entities. Conditional grants should be tied to measurable governance and performance outcomes.
“Every rand misspent is a rand taken from essential services,” says Duvenage. “Without consequence management, reform is just rhetoric.”
Review of the Skills Development Levy and SETA System
Billions are collected annually through the Skills Development Levy, yet outcomes remain questionable. Persistent reports of waste and corruption within SETAs undermine the systems credibility.
Despite the President’s recent announcement in his State of the Nation Address, that a larger share of levies will be directed back to business, OUTA believes the entire SETA framework requires a comprehensive review focused on transparency, efficiency and measurable.
“South Africans deserve proof that Skills Development Levy funds are improving skills and employment outcomes. At present, confidence in the system is weak.”
Stronger enforcement to boost revenue and tackle illicit trade and corruption
OUTA calls for enhanced coordination between SARS, the Directorate for Priority Crime Investigation (DPCI), the National Prosecuting Authority (NPA), and the Special Investigating Unit (SIU) to combat illicit trade, customs fraud, and corruption.
“If we close the leakages in the system, revenue improves without punishing compliant taxpayers,” Duvenage says.
Reducing exposure to failing State-Owned Entities
Treasury must accelerate restructuring and reduce the state’s exposure to non-core and financially distressed State-Owned Entities. Exploring equity partnerships for the South African Post Office and the SABC, and developing exit or equity strategies for Denel, SAA and other non-core state entities, would limit fiscal risk and protect taxpayers from recurring bailouts.
Taxpayers cannot continue underwriting structural inefficiency.
Enforcing municipal financial discipline
Municipal mismanagement continues to erode service delivery and public trust. Wastewater and sewage infrastructure failures are now a public health and environmental risk in many areas. Treasury should tighten grant funding conditionality and link transfers directly to governance and performance outcomes. There is widespread talk about professionalising local government, yet reports from the Auditor General point to the absence of a coordinated government-wide implementation plan.
Conditional Infrastructure Spending
Infrastructure investment must be tied to project readiness, procurement integrity, and clear consequences for underperformance. Without enforcement, infrastructure budgets risk becoming vehicles for waste and corruption rather than engines of growth.
South Africa does not lack policy ideas. It lacks consistent implementation and consequence management. “The 2026 Budget is a test of credibility,” says Duvenage. “Reform must mean structural change, not cosmetic adjustments.”
OUTA believes that fiscal credibility, institutional strengthening, and decisive action against waste and corruption will stimulate confidence and growth more effectively than any new tax instrument.
The organisation has indicated its readiness to engage further with the Minister and National Treasury on practical, implementable reforms that place South Africa on a sustainable path of recovery.
A soundclip from OUTA CEO, Wayne Duvenage is available here.
Read our budget tips here.
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