Budget 3.0: Government cornered into rethinking fiscal discipline

The Organisation Undoing Tax Abuse (OUTA) views Budget 3.0, tabled by Finance Minister Enoch Godongwana on 21 May 2025, as a tacit admission that government can no longer rely on outdated fiscal habits in the face of economic stagnation and unsustainable debt levels.

The revised budget underscores an uncomfortable truth: the fiscal taps are running dry, and without bold reform, South Africa’s economic future remains in jeopardy.

Given that the fuel levies have not been subjected to an increase for the past three years and the price of petrol has dropped by 12% since May 2024, Treasury’s increase in the general fuel levy by 16 cents per litre (less than 1% on the total fuel price) was expected. This hike, combined with increases to excise duties on alcohol and tobacco by between 6.5% and 9%, reflect government’s increasing reliance on already overburdened taxpayers to close revenue gaps.

More concerning however, is the sharp escalation in debt-service costs, now projected at R482 billion for the 2025/26 financial year—which surpasses the combined budgets of critical sectors such as health (R272 billion) and policing (R125 billion). This means South Africa is spending more to service debt than to educate children or protect communities, a trajectory that is economically and morally untenable.

OUTA believes this revised budget should be seen as a watershed moment, not on account of the tax increases it introduced, but for the underlying message it sends that government has run out of room to manoeuvre and must now confront the hard truths of waste, inefficiency, and corruption.

To chart a sustainable path forward for South Africa, OUTA calls for:

• Urgent cost containment, particularly through eliminating wasteful and irregular expenditure, which remains above R60 billion annually according to the Auditor-General.
• Ending bailouts to underperforming SOEs. Despite years of support, entities like Prasa, Sanral, Denel and others continue to drain public funds with little reform progress.
• Improving procurement integrity, especially in municipalities, where billions of rand are lost annually to inflated contracts and politically connected vendors.
• Accelerating economic growth by creating a more enabling business environment, without which South Africa’s projected GDP growth – which continues to languish around the 1% mark – will not meaningfully dent unemployment or expand the tax base.
• Strengthening SARS and enhancing its capacity to tackle tax evasion, including recovering revenue from illicit trade and the informal economy.
• Funding allocated to an integrated plan to improve the criminal justice system designed to tackle corruption and the criminal syndicates that have pervaded the public sector institutions and plague the construction,  banking, tobacco, alcohol and other industries.

Minister Godongwana’s final budget for 2025 must be seen as a final warning that our solution is not more tax—it is more accountability and improved financial hygiene throughout government.

Citizens are justifiably tired of paying more while receiving less. South Africa needs a government that respects every rand, acts against corruption, and delivers real value for public money.

More information

A soundclip with comment by OUTA CEO Wayne Duvenage is here.