There is still uncertainty about how the VAT increase reversal will be implemented following an eleventh hour decision by the National Treasury. The ministry of finance announced the reversal on Thursday morning citing talks with political parties which he said had agreed on alternative sources of revenue to cover the R75 billion rand budget shortfall.
The Economic Freedom Fighters has raised questions about the feasibility and legality of the reversal arguing that to do so, the Finance Minister Enoch Godongwana will have to completely withdraw the Fiscal Framework and Revenue Proposals adapted during a heated session and includes a 0.5 % increase in the Value Added Tax in order to table a new budget that is itself a bill on its own.
The party has consequently written to Speaker of Parliament Thoko Didiza calling for an urgent meeting of political parties represented in the legislator to discuss the practicality and legality of the VAT reversal.It argues its nigh-impossible to effect the reversal before the 1st of May 2025 considering there’s less than a week remaining.
The party said in a media statement the Fiscal Framework became law when it was adapted and could not be tossed away at a whim.
“We have further demanded clarity on whether the Minister intends to withdraw the 2025 Fiscal Framework and Revenue Proposals, which were adopted by Parliament on 2 April 2025. Any such action would constitute a reversal of a formal resolution of the House and would require a clear procedural mechanism, given its binding legal implications,” said the EFF.
The EFF and the DA are challenging the Fiscal Framework in the Western Cape High Court where judgement has been reserved until 29 April and the party believes proceeding to adapt an entirely new framework borders on unlawfulness.
“We have noted the formal tabling of the Rates and Monetary Amounts and Amendment of Revenue Laws Bill [B14—2025], which, among other provisions, seeks to reverse the VAT rate increase announced in the 2025 Budget.The Minister’s memorandum and the Speaker’s Office communication confirm thatthis Bill has already been referred to the Standing Committee on Finance for processing. This development has occurred despite the fact that the very fiscal framework underpinning this revenue proposal remains contested and is the subject of a court process, with judgment expected on 29 April 2025,” said the EFF in the letter to Didiza.
The EFF and the DA have confirmed being approached by the legal representatives of the finance minister for an out of court settlement but the two are yet to decide with the latter stating clearly that it could not abandon its legal challenge as it goes beyond the budget also covering a desire to limit the finance minister’s powers on the budget. The EFF’s argument in court is that the adoption of the Fiscal Framework and Revenue Proposals was done in violation of treasury regulations as well as parliament’s own procedures. The party said even if it accepted that the adoption was done properly, legal questions would still arise regarding Godongwana’s intention to table a new budget.
“ Even if we accept for argument’s sake that a fiscal framework was adopted on 2 April 2025 (a position the EFF is legally contesting), it is an uncontested fact that there is no adopted Division of Revenue Bill, given that the Minister has formally withdrawn it. This alone places the processing of the Rates Bill on constitutionallyshaky ground, with serious risks for the legal validity of any amendments to taxrates or related revenue matters. It is the EFF’s considered view that Parliament should not process a Bill so centralto the 2025 Budget while the legality of the fiscal framework remains under judicial scrutiny. To do so would risk further undermining the credibility and integrity of the legislative process. A brief pause to await the court ruling scheduled for the 29th of April 2025 would not delay Parliament unreasonably, but rather demonstrate institutional respect for legal processes and enhance constitutional governance,” reads the letter.
Meanwhile political parties have called on Godongwana to ensure that the national treasury does not disrupt the social security net in its cost cutting exercise. Parliament’s spokesperson Moloto Mothapo confirmed to Newsnote that the institution’s programming committee had agreed to alter activities in order to accommodate budget related discussions.