Budget speech brings relief but hidden costs loom for South African households

AFTER two failed attempts and weeks of political wrangling, Finance Minister Enoch Godongwana finally delivered the third iteration of the 2025 National Budget Speech on Wednesday, 21 May.

- SEBASTIEN ALEXANDERSON

While many South Africans breathed a sigh of relief at the announcement that the proposed VAT increase had officially been scrapped, the true cost of this budget might not be as comforting as it seems.

Consumers should look beyond the headlines. No VAT increase sounds like a win, but when you dig deeper into the numbers, the financial strain on households is still very real.

Hidden Costs Behind the Relief

Although VAT will remain at 15%—a move that Minister Godongwana says reflects the government's commitment to listening to the public—the budget makes up for lost revenue in less obvious ways. These include:

◆ Fuel Levy Hike: Starting June 4, 2025, fuel levies will increase by 16 cents per litre for petrol and 15 cents for diesel, ending a three-year freeze. With total fuel taxes now accounting for 30-33% of the pump price, this is a direct hit on transport costs, which in turn affects the price of food and goods.