Budget 3.0 must not retreat into austerity

The Institute for Economic Justice (IEJ) calls for a break from National Treasury's austerity policies in the 2025 National Budget. The IEJ argues that spending cuts harm the poor and hinder long-term growth, and proposes specific immediate and medium-term tax reforms to fill revenue gaps created by the reversal of a proposed VAT increase. These proposals include restoring Corporate Income Tax to 28%, removing tax breaks for high-income earners, and implementing wealth and financial transaction taxes.

• There is a growing political consensus among Parliament, labor, civil society, and major parties like the ANC against National Treasury's policy of austerity and spending cuts.
• The IEJ disputes National Treasury's claims regarding the revenue gap caused by reversing the proposed VAT increase, stating the actual gap is R2.7 billion for the current fiscal year and R60 billion over the medium term, rather than the R75 billion often cited.
• Austerity measures are described as a political choice that disproportionately affects the most vulnerable, including 12.7 million unemployed people, and can lead to long-term economic damage by decreasing demand and increasing the debt-to-GDP ratio.
• The IEJ proposes immediate revenue-raising measures, including restoring Corporate Income Tax (CIT) to 28% to raise an extra R12 billion in 2024/25, removing tax breaks for high-income earners (above R1 million per year) which cost approximately R60.4 billion in 2024/25, and drawing down R50 billion to R100 billion from the Gold and Foreign Exchange Contingency Account (GFECRA).
• 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 resource rent tax (R38 billion), and a 25% luxury VAT (R9 billion annually).
• To manage debt costs without austerity, the IEJ suggests macroeconomic interventions such as capital controls to stabilize speculative flows, regulated bank lending to productive sectors, and central bank intervention in the primary bond market.

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} }