Budget ’26: Godongwana giveth, and Godongwana taketh away
Finance Minister Enoch Godongwana says South Africa’s debt is stabilising for the first time in 17 years, marking a major turning point in the country’s public finances.
Delivering the national budget in the National Assembly on Wednesday, Godongwana said government reforms and disciplined spending have helped narrow the budget deficit and restore investor confidence.
Debt is expected to peak at 78.9 per cent of gross domestic product before gradually declining in the coming years.
Godongwana said South Africa’s economic growth outlook is projected to reach 1.6 per cent in 2026, up from the 1.4 per cent estimated for 2025.
“Persistent logistics bottlenecks, weak public infrastructure and the recent outbreak of foot-and-mouth disease continue to weigh on economic activity and pose risks to the outlook,” Godongwana warned.
Meanwhile, gross tax revenue is revised up by R21.3 billion compared to the estimate in last year’s budget.
The higher-than-expected net VAT, corporate income tax and dividends tax collections will see some relief for taxpayers.
“The government has decided to withdraw the R20 billion in tax increases provisionally included in the May 2025 budget,” Godongwana said.
“The improving fiscal position allows us enough room to withdraw the proposed tax increases, without putting fiscal sustainability or economic activity at risk.”
The minister also announced the usual increase in so-called sin taxes.
For 2026/27, excise duties on tobacco will be increased in line with inflation. This includes excise duty on electronic nicotine and non-nicotine delivery systems.
As a result:
• The tax on a 20-pack of cigarettes rises from R22.81 to R23.58.
• Pipe tobacco rises by 28 cents per 25 grams, and cigarette tobacco by 87 cents per 50
grams.
• Cigars rise by R4.56 per 23 grams.
The excise on alcoholic beverages also rises with inflation.
• A 340 millilitre can of beer or cider increases by 8 cents.
• A 750 millilitre bottle of wine goes up by 15 cents.
• A 750 millilitre bottle of spirits will increase by R3.20.
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Fuel levies will also increase in line with inflation. The general fuel levy will go up by 9 cents per litre for petrol and 8 cents per litre for diesel, while the carbon fuel levy will go up by 5 cents per litre for petrol and 6 cents for diesel.
The Road Accident Fund levy will increase by 7 cents per litre.
Social grants have been allocated R292.8 billion, enabling the old-age, disability, and care-dependency grants to rise by R80 in April to R2 400.
The war veterans grant also increases by R80 to R2,420, while the foster care grant goes up to R1,290 in April, a R40 increase and to R1,300 in
October, a R10 increase.
The child support grant and grant-in-aid grant increase by R20 to R580.
The social relief of distress continues in its current form over the year ahead.
