KwaZulu-Natal 2025 budget re-tabled with no changes despite VAT increase withdrawal: Here's why

KwaZulu-Natal’s 2025/26 Provincial Budget was officially re-tabled on Thursday by MEC for Finance Francois Rodgers following a national fiscal disruption caused by the withdrawal of the proposed VAT increase.

Despite this unexpected development at the national level, Rodgers confirmed that the province's fiscal framework remains entirely unchanged.

In his address to the Provincial Legislature, Rodgers reaffirmed the sequence of events that led to the re-tabling. The budget had initially been tabled on March 25, 2025, within the stipulated two-week window following the national budget announcement on March 12, as per Section 27.2 of the Public Finance Management Act (PFMA).

However, with the subsequent withdrawal of the Division of Revenue Bill and the Appropriation Bill on April 24, due to the removal of the VAT increase and a revised fiscal framework, Rodgers was compelled to withdraw the provincial budget and formally communicated this to the Legislature on May 7.

Rodgers said, “Fortunately, as confirmed in a formal allocation letter to the Province by National Treasury, the withdrawal of the proposed VAT increase has had no impact on the Provincial Budget.”

He further highlighted that, “There has been absolutely no change to the fiscal framework in the Province of KwaZulu-Natal because of the withdrawal of VAT. Our budget remains a total of R158.4 billion.”

He explained that the province’s equitable share allocation remains just over R128 billion, with conditional grants standing unchanged at R26.3 billion.

Since the Finance Minister Enoch Godongwana re-tabled the revised Budget on May 21, Rodgers noted that re-tabling KwaZulu-Natal’s unchanged budget now meets the legislative requirements.

“There is no change to the provincial fiscal framework for the 2025/2026 year,” Rodgers said. 

He added that this process is “indeed a copy and paste of what he had done earlier.”

While awaiting formal budget approval, Rodgers assured members that departments have continued accessing funds in accordance with Section 29.1 and 29.2 of the PFMA, allowing for up to 45% spending in the first four months and 10% each month thereafter, without exceeding the prior year’s appropriation.

“Our sole purpose as a Provincial Legislature should now be to conclude the Budgetary process for the 2025/2026 year without any further delays and with minimal duplication, '' he said. 

Head of Department Carol Coetzee followed with a briefing to members, confirming there are no changes to the original budget presentation.

She reaffirmed the province's strong revenue sources with 80.7% of the budget from the equitable share, 16.6% from conditional grants, and 2.7% from own revenue.

Coetzee highlighted an increase in the provincial equitable share, amounting to R555 million in the current year, growing over the Medium-Term Framework to R2.3 billion and R3.1 billion in outer years.

She noted this as a positive shift, saying, “The Equitable Share formula has finally worked in our favour.”

She also referenced key allocations for the Presidential Youth Empowerment Initiative and adjustments for the increased public wage bill, now budgeted at 5.5%. Coetzee added that funding pressures remain, particularly around scholar transport and municipal property rates.

“Infrastructure is critical,” she said, outlining ongoing increases in infrastructure allocations to Health, Education, and Transport.

“Even though there has been an increase in the budget, there are still significant spending pressures that are not fully funded in terms of the baseline.”

The re-tabled budget documents include the Appropriation Bill 2025, the 2025/26 Estimates of Provincial Revenue and Expenditure, the Budget Speech, and the Estimates of Capital Expenditure.

These remain the same documents tabled on March 25 and were not reprinted to avoid duplication and costs.

The Appropriation Bill and all related documents have now been referred to the Committee on Finance and the Standing Committee on Oversight for processing.

hope.ntanzi@iol.co.za

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