Treasury Allocates R91.8 Billion; SARS Gets Bulk for Modernisation, Reforms

South Africa’s Finance Minister, Enoch Godongwana, tabled the National Treasury’s Budget Vote for 2025/26 before Parliament, revealing a R91.835 billion medium-term allocation that reflects the government’s dual priorities of revenue enhancement and structural reform. Nearly half of this funding—R45.760 billion—goes to the South African Revenue Service (SARS) to support its modernization drive, enforcement upgrades, and expansion of tax compliance infrastructure.

The medium-term budget, excluding direct charges, represents a 6.2% average annual growth rate from FY 2024/25 to 2027/28. Minister Godongwana emphasized that this financial package is designed not only to sustain the country’s fiscal framework but also to boost efficiency, fight corruption, and rein in irregular spending.

SARS: A Strategic Investment in Revenue Recovery

SARS’s R45.760 billion allocation, constituting 49.8% of the total Treasury budget, marks an R8 billion increase from its previous baseline. This injection will enable SARS to:

• Enhance debt collection mechanisms through advanced digital systems

• Expand staffing capacity to ensure better enforcement

• Develop and implement e-invoicing systems for VAT transactions

• Upgrade customs infrastructure and procedures

• Modernize payment systems, including instant payment gateways

This increased funding aligns with National Treasury’s broader revenue goals, as evidenced by the recent release of SARS monthly debt collection data, part of a new transparency initiative aimed at tracking fiscal performance in real time.

Budget Allocation Breakdown

The R91.835 billion Treasury budget is spread across economic classifications as follows:

• R3.422 billion for compensation of employees

• R6.983 billion on goods and services

• R78.554 billion in transfers and subsidies

• R89 million for capital asset payments

• R2.786 billion allocated to financial asset management

This distribution underscores a focus on supporting operations, subsidies for transformation, and enhanced asset management capacity.

Audits and Reforms: Strengthening Fiscal Integrity

Minister Godongwana outlined a series of reform initiatives to enhance fiscal governance and curb wasteful expenditure. These include:

1. Audit of Ghost Workers

Using data-driven tools, National Treasury will cross-reference financial and administrative databases to identify and remove non-existent employees from government payrolls. This intervention is expected to recover millions in lost resources annually.

2. Infrastructure Conditional Grant Review

Treasury will launch a probe into underspending by provinces and municipalities on conditional infrastructure grants. The audit aims to understand delays, cost overruns, and poor project quality—key bottlenecks in delivering critical services.

3. Remuneration Review for Public Entity Executives

A comprehensive review is underway to standardize pay structures for executives and board members across Schedule 3 public entities, accounting for their mandates, influence, and operational complexity.

These reforms form part of Treasury’s Annual Performance Plan 2025/26, which aims to enhance job creation, poverty reduction, and inclusive growth.

FATF Greylisting: Progress Toward Delisting

Minister Godongwana expressed cautious optimism over South Africa’s efforts to exit the Financial Action Task Force (FATF) grey list, following the completion of all 22 recommended action items.

“Our national commitment to combating money laundering and terrorism financing is showing tangible results,” he stated.

Key progress includes:

• The FATF has approved an on-site visit to assess whether the reforms are being implemented and sustained

• A new General Laws Anti-Money Laundering and Combating Terrorism Financing Bill will be tabled in Parliament in Q3 of 2025 after further public consultation

• Enhanced regulatory action by SARS, which has recovered R4.8 billion in unpaid taxes linked to state capture cases

• The Financial Intelligence Centre’s Enablers Project, launched to trace illicit financial flows and assist law enforcement agencies

• Professional consequence management by bodies like SAICA, including the disbarment of non-compliant professionals

• A 10-year ban on Bain & Co, though the decision is under litigation

State Capture Reforms and Consequence Management

Treasury has also made strides in implementing the State Capture Commission’s recommendations, including the rollout of a centralized register to track:

• Dismissed public officials

• Individuals who resigned during disciplinary proceedings

• Officers barred from future public sector appointments

This registry spans all levels of government and is seen as a vital tool in institutionalizing accountability.

Forward Outlook: Building an Inclusive, Digital, and Transparent Economy

Minister Godongwana concluded by reaffirming the National Treasury’s mission to secure public finances, modernize government systems, and increase inclusiveness in economic opportunity.

“To meet our national priorities, we must deliver far greater value on every rand spent,” he said.

As preparations continue for the FATF on-site assessment and Parliament prepares to review new financial legislation, the Treasury’s 2025/26 budget signals a clear policy shift—from reactive fiscal correction to proactive structural transformation.