10/03/2025
Moneyweb Article:
Budget 2025: No household can just increase its income. Why can the state?
There’s a saying that insanity is doing the same thing over and over again and expecting a different result. That perfectly describes the ANC’s approach to economic policy. The economy has stagnated for over a decade, yet the government keeps trying the same failed strategies – expecting growth to magically appear.
The numbers tell the story. Since 2010, economic growth has ground to a halt. South Africa has not grown by more than 2% since 2013. Growth in 2024 was just 0.6%, even worse than during 2023’s load shedding disaster. Forecasts for the future suggest that we are still years away from seeing even a modest 2% growth.
Yet, instead of making tough decisions to fix the economy, the government is again turning to tax hikes instead of real reform.
That’s why the budget presentation on Wednesday, 12 March, will be a defining moment. For the first time, the ANC is being forced to negotiate with its partners in the government of national unity (GNU) after trying to push through a Vat increase without even informing the cabinet timeously. This arrogance is exactly why South Africa is in this mess.
Read: The Vat that broke The Budget
A Vat hike will do more harm than good
South Africa’s financial position demands the same tough choices that households make daily. When families are under financial pressure, they don’t have the luxury of signing a document to increase their income – they must cut costs. It’s time for government to do the same.
The first place to start is the bloated cabinet, which is absurdly large for a country in such financial distress. South Africa does not need so many ministers, deputy ministers, and their associated perks. Every cent wasted on unnecessary government positions is money that could be used to fix real problems.
South Africans should not be expected to pay for cadre deployment, corruption, and mismanagement failures. The costs of poor governance should not fall on taxpayers. If state-owned enterprises and government departments were run properly, additional taxes would not be needed to cover inefficiency and theft. The President must take responsibility and cut spending where needed most – at the top.
The only solution is growth
Economic growth, not higher taxes, is the only way to fix this crisis. That means:
• Cutting government waste, starting with the cabinet;
• Fixing tax collection instead of raising rates;
• Attracting investment by making South Africa a place where businesses can thrive.
This budget is about more than just numbers – it will reveal how much the ANC is genuinely willing to change. For the first time in 30 years, the ruling party does not have complete control, and the GNU will test whether it can make real concessions.
That will probably be more important than the budget itself.
Wednesday’s budget will be the actual test.
Ryk van Niekerk
Editor, Moneyweb
