Tax There were no headline tax shocks, no emergency levies, no dramatic restructuring of the tax system.
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This year’s Budget did not arrive with fireworks.
There were no headline tax shocks, no emergency levies, no dramatic restructuring of the tax system. And yet, in its restraint, the 2026/27 Budget may prove more significant than many of its louder predecessors.
For the first time in several years, government has stepped back from signalling new tax increases.
The proposed R20 billion tax hike has been withdrawn. Personal income tax brackets and rebates have been adjusted in line with inflation, offering genuine relief from fiscal drag. Medical tax credits have been nudged upward.
Corporate income tax remains at 27%. VAT remains at 15%. Capital gains tax and dividend withholding tax are unchanged.
In a country where tax debates have often been shaped by pressure and urgency, the absence of new burdens is itself a deliberate choice.
From a practitioner’s perspective, this is a stabilisation Budget. It reflects an understanding that households are stretched, businesses are cautious, and investor confidence remains fragile. The state appears to recognise that predictability, at this juncture, may be more valuable than revenue ambition.
That said, fiscal consolidation has not been abandoned. The deficit is projected to narrow over the medium term. A primary surplus is expected to be sustained. Public debt is forecast to stabilise at just under 80% of GDP before gradually declining. Debt-service costs, which have consumed an ever-larger portion of revenue in recent years, are expected to ease slightly as financial conditions improve.
These projections are not exuberant. Growth is expected to rise only modestly toward 2% over the next few years. Inflation is assumed to remain contained. In other words, the macroeconomic path is steady rather than transformative. The Budget reads less like a bold economic reset and more like a careful attempt to rebuild credibility.
Where the more subtle shift emerges is in the approach to revenue. The state is signalling that it does not intend to rely on new tax rates to close the fiscal gap. Instead, the emphasis is on administrative capacity: compliance, enforcement, digitisation, payroll verification and expenditure discipline. Revenue growth is expected to come from better collection, not higher statutory burdens.
For taxpayers and businesses, this changes the conversation. The risk is no longer primarily legislative. It is operational. Documentation, governance, and compliance systems matter more than ever. The margin for error will narrow, even if the headline rates remain stable.
On the expenditure side, the composition of spending deserves attention. While overall expenditure continues to rise in nominal terms, capital allocations are projected to grow faster than public sector compensation. That suggests an attempt — long overdue — to prioritise infrastructure and network industries. Energy, logistics and transport remain binding constraints on growth. Without improvement in these sectors, fiscal discipline alone will not deliver prosperity.
The social wage continues to dominate non-interest expenditure, reflecting South Africa’s enduring commitment to redistribution. But redistribution now sits within a more disciplined fiscal framework. There is less room for expansion without consequence.
The central question, then, is not whether the numbers balance on paper. It is whether execution follows intention. Stabilising debt is necessary, but it is not sufficient. Capital expenditure must translate into functioning infrastructure. Reform commitments must move beyond policy statements. Municipal governance, state-owned enterprise reform and service delivery will determine whether this period of consolidation becomes a platform for growth or merely a holding pattern.
This Budget does not attempt to be revolutionary. It seeks to be credible. It offers a pause in tax escalation, a signal of restraint, and an opportunity to rebuild trust in fiscal management.
South Africa has bought itself time. Whether that time is used productively will define the next chapter.
Willem J Oberholzer CEO of Fyncor Group CA(SA), M Com(Tax), Chartered Tax Advisor.
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