Finance minister Enoch Godongwana has warned he will have no choice but to increase taxes if he’s forced to introduce a basic income grant.

Godongwana was speaking at a pre-budget briefing in Cape Town tabling the 2023/2024 budget in parliament on Wednesday.

“I’m not raising taxes this year but next year is a different ball game. I’ll raise taxes for different reasons; there’s always a warning which we did in February last year, we’re repeating that warning.

“For argument's sake, let’s say we want to increase the R350 social relief of distress (SRD) grant or improve it and make it a basic income grant … you must also know you’re calling for me to tax you more.”

Godongwana has long been under pressure from civil society formations and ANC tripartite alliance partners to convert the SRD grant to an improved permanent basic income grant.

The SRD grant was introduced in 2020 at the height of the Covid-19 lockdown to cushion the poor and unemployed from the economic impact of the pandemic.

Godongwana told MPs he has set aside R36bn to extend the payment of the  SRD grant to March 2024.

“In 2023/2024, R35.7bn is allocated to the South African Social Security Agency to administer it. Government is still considering alternative options to provide appropriate social protection for the working age population that can replace or complement the grant.

“Funds spend on the grant are lower than projected in 2022/2023 due to improved means testing,” said Godongwana in budget documents tabled in parliament on Wednesday.

He also increased other social grants by 5%.

This will see the child support grant rising from R480 to R505 per month.

Old age and disability grants have been raised from R1,985 to R2,085 per month.

The child support and old age grants account for 70% of government’s spending on social grants, which is due to reach R284bn by 2026.

“These two grants will be provided to 17.5-million beneficiaries in 2023/2024. Social grants will increase in line with inflation over the medium-term.”

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