Budget 3.0 must not retreat into austerity

The Institute for Economic Justice (IEJ) argues that South Africa's upcoming 'Budget 3.0' must abandon austerity and spending cuts in favor of progressive revenue-raising measures to support inclusive growth and protect vulnerable populations.

• There is an emerging political consensus among Parliament, political parties, labour, and civil society against National Treasury's long-standing policy of austerity, with calls for a budget that balances pro-growth policy with pro-poor spending.
• The IEJ claims National Treasury has exaggerated the revenue gap caused by the reversal of a proposed VAT increase; the actual gap is R2.7 billion for the current fiscal year and R60 billion over the medium term, rather than the widely quoted R75 billion.
• Spending cuts are described as a political choice that disproportionately affects the most vulnerable, including 12.7 million unemployed people, and may lead to increased food insecurity and unpaid care work for women.
• The IEJ asserts that budget cuts have failed to achieve fiscal consolidation and have instead contributed to an increase in debt-to-GDP ratios, with effects that can last up to fifteen years.
• To avoid austerity, the IEJ proposes immediate revenue measures: removing tax breaks for high-income earners (earning above R1 million per year), restoring Corporate Income Tax to 28%, and drawing down from the Gold and Foreign Exchange Contingency Account (GFECRA), which holds over R300 billion.
• Medium-term revenue proposals include a net wealth tax on the richest 1% (potentially raising R70 to R160 billion), a 0.1% financial transactions tax (R40 billion), a 25% luxury VAT (R9 billion annually), and a resource rent tax (R38 billion).
• The IEJ suggests alternative ways to manage debt costs without austerity, such as using capital controls to stabilise speculative flows, regulated bank lending to productive sectors, and central bank intervention to purchase government bonds.

APA

Mncube, Z. (2025). Budget 3.0 must not retreat into austerity. Institute for Economic Justice. https://iej.org.za/press-room/statements/statement-budget-3-0-must-not-retreat-into-austerity/

Chicago

Mncube, Zimbali. Budget 3.0 must not retreat into austerity. Institute for Economic Justice, 2025. https://iej.org.za/press-room/statements/statement-budget-3-0-must-not-retreat-into-austerity/.

Wikipedia

{{cite press release |last1=Mncube |first1=Zimbali |title=Budget 3.0 must not retreat into austerity |publisher=Institute for Economic Justice |date=15 May 2025 |url=https://iej.org.za/press-room/statements/statement-budget-3-0-must-not-retreat-into-austerity/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@misc{mncube2025budget, author = {Mncube, Zimbali}, title = {{Budget 3.0 must not retreat into austerity}}, publisher = {Institute for Economic Justice}, year = {2025}, month = may, url = {https://iej.org.za/press-room/statements/statement-budget-3-0-must-not-retreat-into-austerity/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }