Budget 3.0: Godongwana Rejects Wealth Tax as Masondo Expects Smooth Passage 

Budget 3.0: Godongwana Rejects Wealth Tax as Masondo Expects Smooth Passage 

As South Africa braces for the presentation of its revised national budget on May 21, Finance Minister Enoch Godongwana has firmly ruled out the introduction of a wealth tax, even as the government grapples with a significant fiscal shortfall. Deputy Finance Minister David Masondo, meanwhile, has expressed confidence that the latest iteration, dubbed “Budget 3.0,” will secure parliamentary approval without further obstacles. 

The decision to forgo a wealth tax comes amid efforts to address a 75 billion rand ($4.1 billion) revenue gap, following the government’s reversal of a proposed value-added tax (VAT) increase due to political opposition within the coalition government. Godongwana emphasised that South Africa’s wealthy already contribute substantially through existing tax mechanisms, and that implementing a wealth tax would not be prudent at this juncture. 

Despite the fiscal challenges, Masondo has indicated that the Treasury is exploring alternative measures to bridge the budgetary gap, including spending cuts and leveraging stronger-than-expected tax revenues. He has also suggested that the government may tap into contingency reserves to avoid additional borrowing. 

The upcoming budget presentation follows two previous unsuccessful attempts, both thwarted by disagreements within the ruling coalition, particularly over the proposed VAT hike. However, recent consultations with coalition partners have fostered a more collaborative environment, increasing the likelihood of Budget 3.0’s passage. 

The successful adoption of the revised budget is crucial for maintaining investor confidence and ensuring the continuity of government services. Analysts note that a credible fiscal plan could lead to South Africa’s first credit rating upgrade in two decades, while failure to pass the budget may result in higher borrowing costs and diminished investor appetite.

References 

• Godongwana says no to wealth tax. (2025, May 15). Moneyweb. Retrieved from https://www.moneyweb.co.za/in-depth/budget/godongwana-says-no-to-wealth-tax/ 
• South African Deputy Finance Chief Sees Budget 3.0 as Done Deal. (2025, May 15). Bloomberg. Retrieved from https://www.bloomberg.com/news/articles/2025-05-15/south-african-deputy-finance-chief-sees-budget-3-0-as-done-deal 
• Third time lucky? South Africa needs to plug $4.1 billion budget hole. (2025, May 16). Reuters. Retrieved from https://www.reuters.com/world/africa/third-time-lucky-south-africa-needs-plug-41-billion-budget-hole-2025-05-16/ 
• Smooth sailing expected for Budget 3.0. (2025, May 19). BusinessLIVE. Retrieved from https://www.businesslive.co.za/bd/national/2025-05-19-smooth-sailing-expected-for-budget-30/