Relief for students as VAT increase is reversed 

by | May 2, 2025

Finance Minister, Enoch Godongwana agrees to a court order to suspend his decision to increase VAT and this means economic relief to many 

  • VAT increase suspension leave students with a sense of relief
  • Increased VAT rate was met with resistance from various political parties
  • Reversal comes with a R75 billion shortfall for the government revenue

Wits University students expressed relief as Finance Minister, Enoch Godongwana, announced reversal of the 0.5% VAT increase on April 23, 2025 after the DA challenged the legality of the parliamentary process that passed the increase.  

The initial proposal to increase the VAT rate by 0.5 percentage points was met with resistance from various political parties, including the Democratic Alliance (DA) and the Economic Freedom Fighters (EFF).  

For many South Africans, the suspension has provided much-needed relief, including Wits students. As consumers, particularly from lower-income households, funded by bursaries, the VAT increase would have been a big blow.  

Shaunice van Wyk, 3rd year student said: “The VAT increase would have forced me to stop buying the basic products that I am used to buying, so the suspension comes with a relief”.  

Another third-year student, Patience Msiza, echoed similar sentiments, “As a student I am already struggling to make ends meet, so the increase of VAT rate was going to make things even worse.” 

Although the suspension comes with relief, it will result in a R75 billion shortfall in government revenue, prompting the National Treasury to revisit its budget.  

Professor Imraan Valodia, an economist at University of Witwatersrand, who previously written in support of the VAT increase, expressed concerns about the long-term implications. 

“We’ll have to see what comes in the revised budget, but I think government will have to cut expenditure, which means we’ve missed the opportunity to address the social and economic infrastructure backlogs, which are important for shifting the economy onto a growth trajectory to address unemployment and growing levels of poverty.”  

FEATURED IMAGE: Black wallet Photo: Abena Mahlahlane

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