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Daily Maverick
2 days ago
- Business
- Daily Maverick
EFF vs fuel levy increase — court challenge tests legality of fiscal decisions
The EFF has filed an urgent court bid to block Finance Minister Enoch Godongwana's fuel levy hike, arguing it is irrational, economically harmful and unlawfully implemented. This is not just the EFF showing commitment to its stance against the increase, but a relatively novel legal precedent that could have far-reaching implications. A last-minute legal bid On Thursday, 29 May, the EFF filed papers in the Western Cape Division of the High Court to block a fuel levy increase announced eight days earlier during the Minister of Finance's Budget 3.0 tabling. The case makes an unusual use of Rule 53 of the Uniform Rules of Court — a procedural mechanism regularly used to challenge administrative decisions — to challenge a fiscal measure introduced by the Treasury in Budget 3.0. 'We took this action after repeated efforts to caution the minister and appeal to his conscience failed,' said the party in a statement issued on the same day, stating that an increase without a Money Bill 'risks the entire national Budget being declared invalid by the courts'. Though it hasn't sparked the same political uproar as the aborted VAT hike, the fuel levy increase is just as important, as a fuel increase touches aspects of almost all supply chains, increasing costs across every facet of life. As economist Dawie Roodt told Daily Maverick, '… in terms of the effect on the poor, that is pretty much the same as the VAT increase'. The fuel levy increase — 16c per litre for petrol and 15c for diesel — is scheduled to come into effect on 4 June. The EFF is seeking urgent relief before this happens. The EFF Treasurer-General, Omphile Maotwe, told Newzroom Afrika the Treasury intended to gazette the increase on 3 June, 'to allow us no window or opportunity to interdict', hence the urgent application. The EFF's legal logic The application has two parts: Part A seeks an urgent interdict halting the increase and Part B calls for a full review and potential nullification of the decision, with the EFF arguing the increase must be reviewed in light of worsening inflation, stagnant wages and the fallout from the abandoned VAT hike. While it's true that the fuel levy is a regressive tax, Roodt argues that the Treasury's hands are largely tied regarding other measures to generate revenue. 'South Africa's tax burden is already dramatically redistributive. You can't make it more so,' he said. In its founding affidavit, the EFF argues that the fuel levy hike is procedurally flawed and substantively irrational. There was no consultation with Parliament, no socioeconomic impact assessment and no engagement with affected sectors. The party says the decision punishes low- and middle-income households already buckling under cost-of-living pressures. While the minister has statutory power to adjust the levy, the EFF argues that using this mechanism — without oversight or legislative process — amounts to executive overreach. The party called the increase 'yet another demonstration of the anti-black, anti-poor, neoliberal Budget the ANC government continues to impose on the people of South Africa'. No word yet from Treasury By the time of publication, the National Treasury had not responded to detailed questions from Daily Maverick about whether a socioeconomic impact study had been carried out, whether consultations with industry had occurred, and what the Treasury would do if an interdict were granted. This article will be updated once a response is received. Minister in the Presidency Khumbudzo Ntshavheni did not discuss the fuel levy, but defended the broader Budget at a briefing to the media on Friday, 30 May. 'This pro-poor Budget means [that] on every rand, 61 cents of consolidated, non-interest expenditure funds will be spent on free basic services … social grants for those in need.' A silent tax indeed The fuel levy is often called a 'silent tax' — embedded in pump prices and not itemised like VAT. Its revenue flows into the National Revenue Fund and is not earmarked for roads or transport. Between 2012 and 2022, the general fuel levy rose from R1.77 to R3.93. It now accounts for about 6-7% of pump prices. The 2025 increase is expected to raise R2.9-billion. Filling a 50-litre tank will cost about R8 more — a cost that ripples through logistics, transport and food prices. Unlike some OECD countries, South Africa lacks fuel subsidies or robust public transport, making the levy a heavier burden for poor households. Can fiscal decisions be challenged in court? Yes, as the EFF and DA's challenge of the VAT hike showed clearly — but this time the mechanism is different. That case primarily rested on constitutional and procedural grounds. In this matter, the EFF is invoking Rule 53, seeking a review of the minister's decision. The rule requires the state to produce the full record of decision-making, allowing the applicant to supplement their case. Rule 53 is usually applied to administrative actions — permits, suspensions, authorisations — and not budgetary policy. The stakes next week The urgent interdict will be heard on Tuesday, 3 June. If granted, the levy will be paused pending the main review. If refused, it may take effect as scheduled, making a later review moot. Should the court ultimately side with the EFF, it could invalidate the hike retrospectively, forcing the Treasury to re-table it through proper legislative channels. The ruling could also set a legal precedent, inviting future litigation over fiscal instruments previously seen as untouchable. Who really pays? Much of South Africa's fiscal debate is cloaked in specialised language: 'consolidation paths', 'debt stabilisation', 'medium-term frameworks', but the impact is direct: it's on you and I. Fuel taxes inflate the cost of moving people and goods, from taxis to tractors. The EFF's challenge isn't likely to unravel the Treasury's broader strategy, but it could set a strong precedent for how fiscal policy can be challenged; at its core, the case asks who gets to hold the pen when new taxes are imposed, and if the courts should step in if Parliament does not. DM
Daily Maverick
26-05-2025
- Business
- Daily Maverick
The fuel levy increase vs VAT hike explained
While South Africans breathed a sigh of relief at the passing of the 2025 National Budget – and the relegation of the proposed VAT increase – one announcement of note was an increase in the fuel levy. While far less politically contentious than a VAT hike, debate has emerged over whether the fuel levy increase is, in fact, a 'stealth VAT'. It's a shift that raises valid questions about regressivity, affordability, and who will bear the brunt of the cost. When the levee breaks The National Treasury had aimed to raise R75-billion over three years by increasing VAT by 0.5% and then another 0.5% next year. But following political backlash and a likely legal pushback, the proposal was withdrawn. The fiscal gap, however, remained and needed plugging. advertisement Don't want to see this? Remove ads In his revised May 2025 budget speech, Finance Minister Enoch Godongwana announced that the shortfall would instead be offset by expenditure controls and new revenue measures, including a 16c/litre increase on petrol and 15c/litre on diesel, effective 5 June 2025. This marks the first fuel levy increase since 2021/22, bringing the total to R4.01 per litre – up from R3.85. Treasury projects that the change will raise R23-billion over three years, far less than the R75-billion expected from the shelved VAT plan, but still material given the constrained fiscal outlook. Read more: 'We tread water for another year' — this fiscal offering is a stopgap, not a solution Who suffers? 'Well, it is pretty much the same,' economist Dawie Roodt told Daily Maverick when comparing the VAT proposal to the fuel levy increase. 'The only difference is the quantum – the effect area will be less, simply because the rate of increase is less.' VAT applies broadly to goods and services (excluding zero-rated essentials), while the fuel levy targets a narrower tax base, but its economic reach is wide – transport, logistics, manufacturing and food pricing are all exposed – which means that costing goes up across the value and supply chains – and even if it is the case that this increase is more distributed than a VAT hike, its impacts are still disproportional. advertisement Don't want to see this? Remove ads According to the Pietermaritzburg Economic Justice & Dignity Group, which carries out monthly research on basic household costs, a minimum-wage worker commuting by taxi can spend more than a third of their monthly income on transport. Here, even a marginal fuel price increase imposes disproportionate burdens on low-income earners. As The Outlier reported in its weekly newsletter issued on Friday, 23 March 2025: 'While the 16c increase is just another charge for some of us, it will likely impact poorer communities more. When the fuel price rises, it hits South Africa's working class the hardest.' These costs also pass through to food prices and consumer goods. 'Fuel costs increase the price of most other goods and services as they push up transport costs across the board,' the publication said. A revenue hole that still needs to be filled Taking into account that the fuel levy will raise an estimated R4-billion in 2025/26, there is still quite a gap. 'Certainly not comparable,' Roodt notes. 'These two cannot be compared in terms of quantum, but in terms of the effect on the poor, that is pretty much the same.' To close the gap, the Treasury is counting on SARS to ramp up compliance and enforcement – targeting an additional R20- to R50-billion in revenue annually. These gains remain aspirational, however, and are not yet factored into formal projections, both in terms of revenue or timeline, with much still depending on SARS Commissioner Edward Kieswetter. advertisement Don't want to see this? Remove ads advertisement Don't want to see this? Remove ads An inflation signal? Perhaps not For now, headline petrol prices are expected to drop in June, thanks to a decline in the basic fuel price. That may temporarily mask the effect of the levy increase, but longer-term pressures persist. 'Hardly any inflationary pressures will be expected from this,' Roodt argues, 'because petrol prices are coming down in any event.' April CPI data shows inflation edged up from 2.7% in March to 2.8%, with key contributors being food, beverages, housing and services. Read more: SA consumer inflation ticks up in April but remains below 3.0% While the direct inflationary impact of the levy may be limited, the pass-through effects to goods and public transport fares are likely to show over a longer horizon. Is there a better way? It can be said that a fuel levy increase, much like a VAT increase, is regressive and disproportionately affects the most vulnerable. Roodt is unequivocal: 'South Africa's total tax regime is dramatically progressive already,' he says. 'There's nothing else that can be done to make it more progressive, basically.' A detailed look at the May 2025 Budget shows that indirect taxes – including VAT, fuel levies and excise duties – account for more than 45% of gross tax revenue, compared with 39.9% from personal income tax. VAT alone contributes more than R480-billion, and domestic goods and services taxes collectively represent a third of all state income. advertisement Don't want to see this? Remove ads advertisement Don't want to see this? Remove ads In other words, while the tax code may be progressive in theory, its impact is mixed in practice – and regressive taxes still carry weight in the government's pocket – but the fuel levy, unlike income tax, charges the same amount per litre regardless of the earner's bracket. This doesn't negate additional strain on middle and low-income households, but rather illustrates the increasingly narrow options available to the Treasury in an almost zero-growth environment, saddled by debt. A tax by another name? Ultimately, the decision to withdraw the VAT hike and instead raise the fuel levy was as much political as it was fiscal. VAT increases require legislation and expose divisions in Parliament. The fuel levy, by contrast, can be adjusted via the Budget process – no legislative amendment required. Whether this amounts to a 'stealth tax' or a strategic compromise depends largely on your own perspective, but as fuel-dependent households, which includes everyone within our borders in one form or another, absorb yet another marginal increase, it is clear that we are all still paying – just not through VAT. DM
IOL News
25-05-2025
- Business
- IOL News
A critique of the proposal to close public universities and convert them into colleges
Dawie Roodt, an economist, should keep in mind that, universities are not narrowly designed as he would think; to produce immediate job-ready graduates, but to fulfil a broader mandate that includes critical thinking, foundational knowledge, research and public service. says the writer. Dawie Roodt, an economist at the Efficient Group, has advocated that certain state universities in South Africa be closed and converted into colleges, claiming that they are not creating the "right skills" in comparison to private institutions. This concept stems from a worry about the skills mismatch in the South African employment market. However, the plan to close public institutions indicates a fundamental misunderstanding of the varied functions within the post-secondary education and training system, and it risks jeopardising public higher education's long-term developmental, democratic, and intellectual missions. Misunderstanding the Role of Universities Roodt should keep in mind that, Universities are not narrowly designed as he would think; to produce immediate job-ready graduates, but to fulfil a broader mandate that includes critical thinking, foundational knowledge, research and public service (CHE 2016, Badat 2010) and according to Manuel Castells, each with their own specific expectations and internal logic. Castells argued (2001:206) that 'universities perform a major role in the generation of new knowledge'. I assume that Roodt would have known that public universities are grounded in the idea of knowledge production, and innovation contributes to national development in ways that are not reducible to short-term market needs. A university graduate and, by his own admission, of UNISA, our land university, would have known this. His reckless claim that Unisa is underperforming was without facts. At least he should be aware that, in the last few years that UNISA, out of its 151-year history, has emerged as one of South Africa's and the African continent's premier scientific research and innovation institutions. As a dispute to his assumption and weird disinformation about UNISA, the institution has identified ten catalytic niche areas (such as Autotmotive Studies, Energy Studies, Space studies and the Square Kilometre Array, Fourth Industrial Revolution and digitization, etc) that will activate and enhance its academic agenda while remaining focused on the institute's vision of building Africa's Intellectual capacity. My view is that the role of public universities goes beyond 'immediate' skills production; their purpose includes fostering critical thinking. The failure of Roodt's argument was to realise that the skills gap cannot be solved by solely changing from public to private and from a public university to a private university.
IOL News
15-05-2025
- Business
- IOL News
'Most universities must be closed; they not producing required skills'
Prospective students attended the UWC open day. Economist Dawie Roodt says that the university space should be reserved for those who can contribute to producing skills for society. Image: Ian Landsberg / Independent Newspapers Economist Dawie Roodt said this week that most public universities in South Africa should be closed because they are not producing the required skills. He gave some examples, such as the need for electricians, and asserted that the humanities are at the bottom of the skills set production. While theology specifically was not mentioned by Roodt in his musings, the question of its place in a university always lingers. For this reason, one is prone to respond, since this question has, in the past, been directed at the humanities — and theology in particular. A myriad of sentiments suggests, with reason, that theology is a science worth engaging with in the university. From the likes of F.C. Baur to Ernst Troeltsch, there has always been conversation on the role of theology and the humanities, particularly in the university. For this reason, the argument advanced by Roodt is, sadly, not a new invention. The beginning of each century has seen renewed questions, and conversations have ensued around whether the humanities, as a science, have a place in the university. Thus, along every critical step in the evolution of the idea of a university, new questions have arisen, and all these have been met with corresponding responses. Two scholars come to mind as I reflect on Roodt's views on a university. It is clear that, for Roodt, the university space should be reserved for those who can contribute to producing skills for society. Without justifying why other so-called humanities programs are irrelevant, Roodt seems to have no qualms with the idea of a university in Africa and what it initially came to represent. These two scholars are Ali Mazrui and Mahmood Mamdani. Mazrui's views on a university in Africa are well known, having described a university in Africa simply as a transmission belt for Western values. For Mazrui, just as the African university has its genesis in European imperialism, so does the commercial multinational corporation. It must not be forgotten that the university in Africa had a particular purpose; in most cases, it served the very Europeans in the African diaspora. Those Africans who were later allowed to be educated in these universities were trained to become competent in serving the needs of the Western folk in Africa. It was for this reason that, even when African personnel were appointed at these universities, the moderation of what was taught still needed to be done in London, Belgium, or Paris — and sometimes this moderation happened in horrifying ways, not recognising an education bespoke for Africans in Africa. Mamdani is the other scholar that these reflections bring to mind. In a fascinating case study of market-based reforms at Uganda's Makerere University between 1989 and 2005, Mahmood Mamdani discounted attempts at pitting private universities against public universities. He argued instead that a third way could be sound. Mamdani assessed this because particular histories and lived experiences make up a university, particularly a university in Africa. Since scholars such as these have long engaged with attempts at transforming a university in Africa to reflect the lived experiences of Africans, we can sadly agree that the agenda to push for a university that considers the lived experiences of her people holistically is indeed a recent endeavour in South Africa, considering the impact that apartheid had on our psyche. I am reminded of similar conversations a few years ago when I was chair of the Philosophy, Practical, and Systematic Theology department. This was when conversations on the relevance of philosophy — and maybe to a lesser extent, theology — for a university had become a poignant subject in the university SENATE meetings. Many SENATE members at the time were unequivocal in their sentiment that unless we wanted to become a glorified business school, we were neglecting philosophy and theology to our detriment. The financial meltdown of 2008 is one more example of when spirited opinions, devoid of the essence of the humanities, were entertained. While it is essential to produce skills that contribute to different skill sets, it is not helpful to discount other disciplines without properly understanding their purposes. Adebayo Olukoshi, former Executive Secretary of the Council for the Development of Social Science Research in Africa, once indicated that the humanities are the conscience of society. If there were to be a yardstick to measure this, it would certainly not come in the form of money or the production thereof, but it would align with those left behind as others progress. It would then seem to me that the frustration, which is palpable in the voice of Roodt, is to be located elsewhere. Perhaps it is becoming increasingly clear that with the numerous calls for the decolonisation of learning offerings, a university in Africa can no longer serve foreign interests at the expense of the locals. The decolonisation of learning offerings refers to re-evaluating and restructuring the curriculum and teaching methods to reflect the local community's diverse experiences and knowledge systems. Perhaps the numerous calls made by African universities to serve the continent foremost, before serving the global community, are the issues that irritate Roodt and his ilk, because the questions for discourse today are no longer critical for the West and are no longer dominated by white folk. Still, academia must intentionally allow the lived experiences of marginalised communities to frame these discourses. Prof Rothney Tshaka Professor of Systematic Theology and Ethics UNISA
Mail & Guardian
15-05-2025
- Business
- Mail & Guardian
Prof Linda du Plessis rebukes Dawie Roodt's university closure comments
Prof Linda du Plessis. South Africa has too many public universities and most of them should be closed. Furthermore, only 10% of the population should pursue a university education, 'while there is a big shortage at other skill levels'. These are some of the comments recently made by economist Dawie Roodt, who also labelled South Africa's primary education sector as one of the worst in the world, arguing that the quality of state-owned universities has declined and that universities should be more selective when admitting students. He also proposes that South Africans should receive educational vouchers to spend at whichever institution they want. This begs the question: Do South Africa's 19 public universities and seven universities of technology still have a significant role to play in the country's education sector, or does the future – as Roodt argues – increasingly lie in private universities? According to Prof Linda du Plessis, vice-principal and deputy vice-chancellor for teaching and learning at the North-West University (NWU), Roodt's statements fail to consider all the facts. 'Roodt's argument oversimplifies a complex educational and socio-political landscape. South Africa produces high-quality graduates across numerous fields, and his sweeping statements fail to acknowledge the significant strides made in research, teaching, learning and community engagement. Given a graduate employment rate below 10%, compared to a youth unemployment rate exceeding 40%, a degree remains a sound investment,' she says. According to her, Roodt's focus is almost exclusively on the shortcomings of a handful of public universities, without acknowledging the many achievements in various disciplines. 'These include globally recognised researchers and world-class programmes, substantial high-quality, widely cited research output and critical contributions to public health, science and national policy. His narrative is one-sided and overlooks the essential fields that underpin the country's functioning, such as law, accountancy, engineering, nursing, social work and teaching. Of particular concern is the ongoing underperformance of the Technical and Vocational Education and Training (TVET) sector and the persistently low enrolment numbers. He barely addresses this or the fact that TVET students are part of the post-school education system and receive NSFAS funding. 'Moreover, public universities are not merely educational institutions; they are engines of social mobility, redress and transformation. Suggesting that only 10% of the population should attend university disregards the national imperative to expand access to higher education, as set out in the National Development Plan (NDP).' She also notes that Roodt compares the performance of public and private institutions without providing empirical evidence or comparative data on student outcomes or employment rates. 'Most private universities in South Africa do not engage in significant research, offer limited post-graduate opportunities and cater to a small segment of the population. They also often lack the research infrastructure necessary for impactful academic work. By contrast, public universities, despite their challenges, have made significant progress in establishing research networks, international collaborations and strategic partnerships with national funding bodies such as the National Research Foundation (NRF) and the Department of Trade and Industry (DTI). The proposal to introduce vouchers lacks clarity on how they would make a meaningful difference. Students already have the freedom to choose their institution of study. Roodt overlooks critical issues such as planning, accommodation and transport, which are integral to the student experience. The current NSFAS funding model is determined by government policy, not by public universities. One of its greatest benefits has been the promotion of more equitable access to education. Roodt's argument does not address how a privatised system would avoid exacerbating existing inequalities. It might be more appropriate to explore alternatives, such as converting NSFAS to a partial loan scheme, with repayment linked to academic performance – an idea that could merit further economic analysis. The suggestion to 'level the playing field' between public and private universities assumes that they operate under similar mandates and constraints. They do not. Public universities have a constitutional mandate to serve the public good and advance social justice. These are roles that do not align with the profit-driven models typical of private institutions. Ultimately, Roodt's assertions lack a solid evidentiary foundation. While the public university sector has areas requiring improvement, a blanket call to dismantle it in favour of private alternatives reflects a fundamental misunderstanding of the sector's role in society and its broader impact,' Prof du Plessis concludes. To return to the question of whether the country's public universities still have a significant role to play in the country's education sector, the answer seems to be an unequivocal yes. Follow the link to the article here:
