The planned increase of 0.5 percentage points in the South African Value-Added Tax (VAT) rate later this year, could have dire implications on students’ livelihoods. This is according to various student leaders at Stellenbosch University.
“A VAT increase would undermine students’ ability to repay loans on already overstretched budgets,” said Reagan Johnson, sub-region coordinator for the Economic Freedom Fighters (EFF) in Stellenbosch. “It will raise the cost of everyday necessities, from hygiene products to transport, textbooks, and stationery.”
Mzwakhe Bolotina, a communications executive of Stellenbosch University’s (SU) Student Representative Council (SRC), also warned that it would increase cost of living for students in higher education institutions.
Godongwana announced that VAT will increase by 0.5 percentage points in 2025 and again by 0.5 percentage points in 2026, reaching 16% in the 2026/27 financial year.
Impact on students
The increase will impact young people’s everyday expenses, said Sanusha Naidu, a political analyst and senior research fellow at the Institute for Global Dialogue, in correspondence with SMF News.
“Their books, accommodation, and their food, it would be a struggle for them,” said Naidu. “At the end of the day there are not enough bursaries that cover these expenses, and the student financial aid program from the government has been in a serious dilemma.”
“This VAT increase is anti-poor and obstructive,” said Emihle Nqiwa, a third-year LLB student at SU. “Basic services are going to become inaccessible to many students.”
Nqiwa believes that a VAT increase is insensitive and that it leaves many poor South Africans in despair.
Expanding zero-rated VAT items
To cushion households against a high cost of living, Godongwana announced an expansion of VAT zero-rated food items.
According to the minister’s speech, the newly-included items are canned vegetables, dairy liquid blends, and organ meat from sheep, poultry, and other animals.
“Students need structural support, not crumbs dressed up as relief,” said Johnson. “Zero-rating a few items does not compensate for the general cost of living hike caused by VAT increases elsewhere.”
A trolley of zero-rated Value-Added Tax (VAT) items, including: bananas, onions, milk, eggs, rice, canola oil, potatoes, and brown bread, according to the 2022 Value-Added Tax (VAT) guide to vendors by the South African Revenue Service. With two increases of 0.5 percentage points in Value-Added Tax, finance minister Enoch Godongwana announced an expansion of zero-rated VAT items “to cushion households”. PHOTO: Enzokuhle Sabela
Fuel levy unchanged
In order to protect vulnerable households, the finance minister announced that the government will not be increasing the fuel levy for another year, saving consumers around R4 billion over the next year.
“It is definitely a relief for commuter students,” said Nqiwa about the fuel levy announcement. “It does alleviate some financial pressure.”
In the 2025 budget speech, finance minister Enoch Godongwana announced that the fuel levy would remain unchanged for a year, despite a percentage point increase in Value-Added Tax (VAT) in 2025/26. Emihle Nqiwa, a third-year LLB student at Stellenbosch University, said that not increasing the fuel levy would alleviate some financial pressure for students. PHOTO: Enzokuhle Sabela
Impact on spending power
“A VAT increase will push young South Africans further into financial hardship, limiting their opportunities for economic mobility,” said Bolotina.
The National Students Financial Aid Scheme (NSFAS) allowances are not enough for students, and relying on that relief will make students struggle, said Nqiwa.
“They have to pay more for basic services, while they are not allocated more funds for their allowances,” said Nqiwa. “This increase renders students that are already suffering more vulnerable.”
Stellenbosch University’s (SU) Neelsie Student Centre during lunchtime. A Value-Added Tax increase will impact young people’s everyday expenses, including their accommodation, books, and food, according to Sanusha Naidu, a political analyst and senior research fellow at the Institute for Global Dialogue. PHOTO: Enzokuhle Sabela