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Financial News

Each year, the Finance Minister gives a speech about how the  government will be getting money (through things like taxes) and how they will be spending money (on things like public works and social grants).

This speech happens each year in February.

Though the economy has not been shooting the lights out, there have been some positive turns, like the Rand being stronger against the US Dollar (due to what the US is up to) and lower inflation recently.

There are, however, many local challenges, including water supply and security and the ongoing concerns about electricity generation.

The Budget also sets out information about who pays tax, how much they pay and what relief taxpayers can get to reduce how much tax they pay.

The speech also sets out how Government are paying back the people they have borrowed money from.

Highlights

    • The Government’s debt plan is working
      National Treasury has been trying to slow down debt by cutting spending and collecting more taxes. The budget gap is getting smaller, and the cost of paying interest on debt is starting to fall.

    • Government Debt payments are still very high
      In 2026, government will spend R432.4 billion just on paying back debt and interest. That is money that cannot be used for other services.

    • Government will borrow less
      The government will still borrow money, but less than before. Borrowing will drop from R563 billion in 2025 to R380 billion in 2026.

    • The economy is growing (slowly)
      The economy is expected to grow by 1.6% in 2026. This is slightly better than 1.4% in 2025. Inflation is expected to be about 3.4%.

    • No extra income tax increase
      Because government collected more tax than expected in 2025, it has cancelled plans to raise income tax by R20 billion. Tax brackets and rebates will now increase with inflation, which means workers will not pay more tax just because their salaries go up with inflation.

    • Higher taxes on alcohol, tobacco and fuel
      Excise taxes on cigarettes and alcohol will increase with inflation. Fuel levies will also rise slightly, which may push up transport and food costs.

    • Encouraging people to save
      The annual limit for tax free savings accounts increases from R36,000 to R46,000. The retirement fund tax deduction limit rises from R350,000 to R430,000. This allows people to save more for retirement without paying extra tax.

    • VAT threshold for small businesses goes up
      Small businesses will now only need to register for VAT if their turnover is more than R2.3 million. This is up from R1 million, which may reduce admin for small businesses.

    • Most of the budget goes to social services
      About 60% of the R1.95 trillion budget will go to education, healthcare and social grants.

    • More money for HIV and AIDS programmes
      R26 billion will be set aside over the next three years to prevent mother to child transmission and provide antiretroviral medicine.