Finance Minister Enoch Godongwana is expected to present a mini budget with steady tax collections but little room for more fuel relief, according to Nedbank senior economist Isaac Matshego.
Writing for SABC News, Matshego said there should be no sign of new taxes in the coming years. He said the Treasury would also offer only limited relief from high fuel prices.
The Medium-Term Budget Policy Statement, known as the mini budget, reviews how public finances did in the first half of the financial year. It also sets out the plan for the next three years. The financial year runs from April to March.
Matshego said the economy is now in a harder position than it was at the February 2026 Budget Speech. He said the Middle East war started three days after that speech. It pushed up fuel prices and disrupted global supply chains.
He said the local economy had held up despite weak spots in mining and manufacturing and higher inflation. Gross tax revenue has grown closely in line with the Budget forecasts, he said.
According to Matshego, cuts to the fuel levies between April and August cost the state more than R10 billion in revenue. He said this large amount suggests there is little chance of further fuel price relief.
Personal income tax makes up about 35% of total tax revenue. Matshego said it rose by 8.4% in the first five months of the financial year. That is ahead of the 7.5% growth projected for the full year in Budget 2026.
He expects this growth to slow in the second half of the year. He said companies facing rising costs are likely to limit pay increases, especially bonuses. He still expects personal taxes to grow faster than inflation for the year.
Company tax collections rose by 20.9% in the first five months, up from 9.4% in the previous year, Matshego said. He linked this to strong precious metal prices, which lifted mining profits.
He expects corporate tax growth to slow but still beat the Treasury’s estimate. He said any tax overshoot would again come from mining taxes. Last year’s overshoot was R21 billion, he said.
VAT collections were up by 9.1% so far, with 39% of the full-year target already collected. Matshego said higher inflation should keep VAT growth near 9.3%, well above the Treasury’s projected 4.8%.
On spending, total spending grew by 4.6% in the first five months, against a full-year projection of 3.5%. Matshego expects growth of 3.7% for the year, mainly because of higher inflation.
In Budget 2026, the Treasury set a goal of R12 billion in savings under its Targeted and Responsible Savings initiative. Matshego said the Treasury would stay committed to keeping spending under control.
Public sector pay rises for this year were set at 4% under a three-year wage deal signed in February 2025. Matshego expects the next increase to also be 4%. He said unions will likely push for bigger rises later, but he does not expect increases above 5% a year.
Interest payments on state debt rose by only 0.5% in the first five months, compared with 4.5% a year earlier. Matshego forecast that interest payments will fall to below 20% of revenue by the 2029/30 financial year.
Source: this article is based on reporting by SABC Business. Image: SABC Business. Written with the help of AI and published by the Tzaneen Voice Business desk. See our Editorial Standards.
Anelisa Nkuna covers business and money news for Tzaneen Voice. Anelisa reports on the rand, fuel prices, interest rates, jobs, Eskom, Transnet, farming and company results. The aim is simple: explain what the numbers mean for household budgets, small businesses and workers in South Africa.