Treasury paying price for govt decision to hike public sector wages: Big business
Treasury hopes to plug a R60 billion revenue gap in the face of high debt, ballooning debt servicing costs, and a wide budget deficit.
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JOHANNESBURG - Big business is of the view that National Treasury is paying a high price for government’s decision to hike public sector wages at a time when the country’s public purse is running dry.
This comes as Minister of Finance Enoch Godongwana prepares to re-table Budget 2025.
It will be the second time after the initial February budget failed.
ALSO READ: National Treasury warned VAT hike won’t solve budget crisis
Some parties in the Government of National Unity (GNU) disagreed on a proposal to hike value-added tax (VAT) by two percentage points, upping it from 15 % to 17%.
National Treasury hopes to plug a R60 billion revenue gap in the face of high debt, ballooning debt servicing costs, and a wide budget deficit.
CEO of Business Leadership South Africa Busi Mavuso said government dug itself a hole after agreeing to a 5.5% wage increase for 2025/26.
“We definitely need to be cutting that and a whole lot of other fat in the budget and I think there are a lot of inefficiencies in government. So, for them to think that an average South African should be burdened with VAT of more than 2% is actually crazy, especially in a country with unemployment of 43% according to the expanded definition, where more of our people are living in poverty.”