Price increase could deepen poverty and worsen food insecurity
Peter Luhanga
• Families already stretched thin say rising prices on basics like onions and bread will hit them
hardest.
• Ramaphosa promises more cash for grants and poor households, but trust remains low.
• However, many residents in informal settlements were largely unaware of the 0.5 percentage point
VAT increase passed on 2 April, which is set to take effect from 1 May.
Thumeka Ngcwama, 36, lives with her sister in a zinc shack in Ekuphumleni informal settlement in Dunoon. Ngcwama is a mother of three children aged four, 13, and 19, and is unemployed. She depends on her sister’s income for daily necessities. Her children remain in their home village in the rural Eastern Cape while she occasionally picks up short-term work.
Ngcwama says she understands what VAT is, but she was unaware that this year’s national budget, passed by Parliament on Wednesday 2 April, includes a 0.5 percentage point increase in VAT set to take effect on 1 May.
“I only heard about it when Iliso Labantu asked me. I didn’t know it’s already happening. It means everything we need to survive, like bread, onions and tomatoes, is going to cost more. The increase is good for businesses, but not the unemployed,” said Ngcwama.
She believes the government should prioritise job creation before raising consumption taxes.
“If people had work, they could at least afford to buy the basics. But now, how do we cope?” She asked.
Ngcwama says many people in her community are unaware of the VAT increase because they do not have televisions, smartphones or the data to access reliable news on the internet.
“They must inform us before passing these things in Parliament.”
She also called for national campaigns to educate residents about the annual budget and its implications.
“They must talk to us, not just in Parliament,” she said.
Her concerns were shared by Fezeka Kayingana, 52, a mother of five who has a job with the Expanded Public Works Programme (EPWP). As a janitor, Kayingana is employed to clean communal toilets in Dunoon’s informal settlements. She lives in a single-room shack with her two youngest children, aged 11 and 13, and struggles to stretch her wages to the end of the month.
“When groceries run out, I use my children’s grants to buy more. If prices go up again, we will suffer even more,” said Kayingana.
She believes the government needs to engage directly with low-income communities before making decisions such as raising VAT, arguing that those already struggling to make ends meet bear the brunt of rising prices.
“We don’t trust politicians. They make promises, especially around elections, and then do nothing. They should speak to us before raising taxes,” she said.
Atlantis resident Liza Munro said she understood the government’s need to boost its revenue base but criticised the VAT increase as a burden placed disproportionately on ordinary citizens.
“It feels like the state is asking more from us, without showing how this will directly benefit us,” said Munro.
She called on the government to explore alternative revenue streams and better manage its money to shield households from rising costs. “The cost of living is escalating far too quickly, and VAT hikes feel like a knee-jerk reaction instead of a well-considered strategy to stimulate economic growth,” she said.
According to news reports, such as in the Sunday Times on 13 April, the proposed VAT increase has triggered a political standoff within the Government of National Unity (GNU).
Finance Minister Enoch Godongwana initially proposed a two-percentage point VAT increase in February. This was later revised to two smaller hikes of 0.5 percentage points over two years. The Democratic Alliance, now a key partner in the GNU, has strongly opposed the increase.
Tensions escalated after Parliament approved the fiscal framework earlier this month, prompting some service providers to begin invoicing at the new 15.5 percent VAT rate. With a final budget vote scheduled for 6 May, pressure is mounting on the Treasury to find alternative sources to raise the R13.5 billion that would be lost if the VAT increase is scrapped.
In his 2025 budget address shared on X on Monday 7 April, President Cyril Ramaphosa promised major support for the most vulnerable citizens. A full 61% of the government’s spending will be poured into social grant programmes, including critical child care, old age and disability grants. These grants are getting a boost above inflation this year, providing some relief as costs climb. Ramaphosa also announced the Social Relief of Distress grant will be extended for another year, ensuring the nation’s poorest continue to receive vital assistance in tough times.