It’s been seven years since South Africa’s VAT was increased from 14% to 15% – a decision that was meant to generate tax revenue and possibly stabilise public finances. Yet for millions of South Africans, especially those barely earning enough to survive, the weight of that increase has never subsided; in fact, it continues to impact the way households navigate their budgets for food, transport, and basic survival.
Now with the 0.5% VAT hike on the table, the newly announced increase will drive up the cost-of-living expenses making it much more difficult for vulnerable groups to get by let alone those who are unemployed or work precarious jobs.
For people like Duduzile Ndlovu, 37, from Soweto, these fiscal changes aren’t just abstract policy shifts – they have direct, felt impacts on how daily life is navigated. Until recently, she worked as a food handler in a school in Soweto but now faces a return to unemployment after her contract ended last month. Duduzile had been receiving a stipend of R2200 per month, which she used to secure basic food items for her household.
Contracts for various food handlers employed in public schools under the Expanded Public Works Program (EPWP) came to an end in March and a new cohort of volunteers will be hired. Food handlers are responsible for cooking daily nutritious meals for school children. However, their contracts are on a rotational short-term basis. Those whose contracts are nearing the end, face the unfortunate risk of being plunged back into unemployment.
“At the end of our contracts, we are offered nothing, it’s like we never existed. I would like our government to ensure that all parents who work under NSNP are recognized, respected and paid a fair minimum wage”.
It is people like Volunteer Food Handlers who will bear the consequences of the rising cost of living exacerbated by the VAT hike, – most food handlers earn below the National Minimum Wage of R28,79 per hour. Instead, they are compensated for about R15,83 per hour in line with the EPWP minimum wage, equating to the earlier mentioned R2200 per month.
To put this in perspective, the recent Household Affordability Index indicated that the cost of a basic food basket amounts to R5329,36. This gruesome image tells us that a food handler would need to earn more than double their current stipend to feed their families, and even then, at the most basic level. And this figure doesn’t even account for school fees, transport etc.
While the government continues to encourage the use of the zero-rated food basket as a means to shield low-income households, most recently mentioned in Finance Minister Enoch Godongwana’s 2025 budget speech– the reality on the ground tells a different story. In an article by Professor Derek Yu from the University of the Western Cape, he cautions that even with these exemptions in place, the VAT system still disproportionately affects low-income communities. Items such as soap, cooking oil, and sanitary pads, which are not included in the basket, remain essential but are too expensive. A person earning R2200 per month will not be able to secure all basic items required to sustain themselves throughout the month.
The work of food handlers should be formalized
Statistics South Africa’s 2024 National Poverty report shows nearly half of the country’s population lives below the poverty line, illustrating that food insecurity is a persistent problem facing millions worldwide. As a means to curb malnutrition and minimize the impact of food insecurity, the South African government introduced the National Schools Nutrition Program (NSNP) in 1994. Since its inception, the program has successfully provided meals for approximately 9,7 million learners in public schools. While the program has not been without shortfalls, some strides have been recorded, particularly the link between the program’s availability and an increase in learner attendance and class concentration.
The program’s existence in certain areas also stimulates agricultural efforts, the food and vegetables cooked in schools are sometimes sourced from local farmers. In other areas, the program utilizes the tendering system where service providers are contracted to supply the recommended ingredients to prepare these meals. This value chain is also supplemented by food handlers. Unemployed parents who receive some form of welfare support from the state, such as a child support grant, are urged to apply for this program, and their working contracts usually range from 12 – 36 months on a rotational basis.
Depending on the school size or population of learners, the number of appointed handlers varies, with eight being the minimum in most cases. They are appointed to work six hours a day. Their core duties include preparing, cooking and serving about 2 meals per day. The program has remained in the spotlight for issues with suppliers, the controversial tendering system and how service providers inflate prices for food provided in schools and the infamous court case that took place in 2020 when the program was halted due to COVID-19.
The NSNP can be touted as a key policy intervention that continues to lessen the impact of food insecurity in public schools. However, the key frontrunners who ensure this program runs smoothly are hardly recognized. The nature of the work of food handlers is precarious, they earn below minimum wages and are expected to participate in care work that extends their core duties and what they are trained for. They face a plethora of challenges, particularly in an environment where unemployment is on the rise and economic opportunities are deadlocked. Formalizing the work of food handlers, giving them adequate benefits and paying them fair wages will protect many from the ramifications of the cost-of-living crisis.
VAT increase threatens food handlers’ livelihoods
For food handlers like Duduzile, and many other South Africans living on the margins, the proposed 0.5% VAT hike is more than just an austerity measure – it feels like yet another blow aimed at those already carrying the heaviest burden. Based on research conducted by the Pietermaritzburg Economic Justice & Dignity Group, low-income households spend 70 per cent of their income on VAT-applicable necessities outside of the zero-rated food basket.
Consequently, food handlers already receive a stipend of R2200 per month, and a tax increase will further deplete what little is left – pushing them further into poverty. Amid taxing everyday necessities like electricity, transportation to work, and school supplies, the budget becomes a stretch.
Based on the Budget Justice Coalition’s 2025 analysis, a typical food handler would be forced to pay another R45-60 monthly for the new 15.5% VAT. Despite the government’s attempts to portray the increase as minimal, many people living on precarious wages would have to decide between electricity and food.
The adoption of regressive taxes to address our fiscal challenges will have dire consequences for the majority of those who are unemployed and without formal employment. The tax burden passed on to an already shrinking tax base exists to further expand the self-perpetuating cycle to stagnation marked by slow economic growth.
References
Budget Justice Coalition. (2025). Budget 2025 delay: An opportunity for a people’s budget amid a cost of living crisis. Youth Capital. https://youthcapital.co.za/budget-justice-coalition-budget-2025-delay-an-opportunity-for-a-peoples-budget-amid-a-cost-of-living-crisis/
Derek, Y. (n.d.). Improving the targeting of zero-rated basic foodstuffs under VAT in South Africa – An exploratory analysis. ResearchGate. https://www.researchgate.net/publication/254451754_Improving_the_targeting_of_zero-rated_basic_foodstuffs_under_value_added_tax_VAT_in_South_Africa_-_An_exploratory_analysis
Government of South Africa. (n.d.). What is the National School Nutrition Programme (NSNP)? https://www.gov.za/faq/education/what-national-school-nutrition-programme-nsnp
IEJ. (2025, March 13). Statement: Budget 2.0 – An opportunity for Parliament to work towards a pro-poor budget. Institute for Economic Justice. https://iej.org.za/statement-budget-2-0_13-march-2025/
IEJ. (2025, March 10). Joint statement: A call for social justice and a transformative budget. Institute for Economic Justice. https://iej.org.za/joint-statement_a-call-for-social-justice-and-a-transformative-budget_10-march-2025/
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National Treasury. (2025). Budget Speech 2025 by Minister Enoch Godongwana. https://www.treasury.gov.za/documents/national%20budget/2025/speech/speech.pdf
Pietermaritzburg Economic Justice and Dignity Group. (2025, February). Household Affordability Index. https://za.boell.org/sites/default/files/2025-03/february-2025-household-affordability-index-pmbejd_26022025.pdf
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Reuters. (2025, April 6). South Africa’s Treasury looking at alternatives to VAT hike. https://www.reuters.com/world/africa/south-africas-treasury-looking-alternatives-vat-hike-2025-04-06/
Statista. (2024). National poverty line in South Africa 2024. https://www.statista.com/statistics/1263737/national-poverty-line-in-south-africa/
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Statistics South Africa. (2023). Investment in school feeding schemes. https://www.statssa.gov.za/?p=17681
UWC. (2025). UWC experts weigh in on scuppered VAT hike, political drama over budget. University of the Western Cape. https://www.uwc.ac.za/news-and-announcements/news/uwc-experts-weigh-in-on-scuppered-vat-hike-political-drama-over-budget
University of Massachusetts Amherst. (2005). An employment-targeted economic program for South Africa. PERI/UNDP. https://peri.umass.edu/wp-content/uploads/joomla/images/publication/UNDP-S-Africa.pdf