In a landmark ruling that could reshape fiscal governance in South Africa, the Western Cape High Court has declared the finance minister’s unilateral authority to adjust the value-added tax (VAT) rate unconstitutional. This decision has been met with enthusiasm by both the Democratic Alliance (DA) and the Economic Freedom Fighters (EFF), who argue it reinforces crucial constitutional principles regarding parliamentary powers.
The case was brought by the DA in 2025, following Minister of Finance Enoch Godongwana’s controversial attempt to raise the VAT rate from 15% to 15.5% during his inaugural national budget presentation. The proposed increase sparked widespread debate, as concerns mounted over its potential impact on already strained households across the nation.
The court acknowledged that while Parliament has a 12-month window to review and confirm any tax increase proposed by the finance minister, the crux of the issue lies in the timing of such decisions. The court noted that if Parliament were ultimately to reverse the increase, it would be too late for citizens to reclaim taxes already paid—a situation that undermines fiscal accountability.
Deliberating on the matter, the full bench of the court underscored an essential constitutional principle: the administration of taxation is a power that must reside solely with Parliament. By delegating this authority to the executive, the government risks bypassing established financial scrutiny processes, notably the money bill procedure.
Following the ruling, DA federal council chair Helen Zille expressed satisfaction, highlighting the judgment as a significant validation of accountability in South Africa’s financial governance. “The DA was right all along to say that it was unconstitutional and unlawful for Mr Godongwana to seek to raise the VAT, and it was right for the DA to oppose it so strongly,” she asserted.
The court’s declaration invalidating Section 7(4) of the VAT Act is not yet final and is subject to confirmation by the Constitutional Court. Should this ruling be upheld, it will mark a pivotal change in how tax legislation is approached and enforced in the country.
In order to comply with the court’s decision, Parliament has been granted a 24-month period to amend the VAT Act appropriately, ensuring that future adjustments to the VAT rate adhere to constitutional stipulations and procedural safeguards.