The Western Cape High Court has reserved judgment in an urgent application initiated by the Democratic Alliance (DA) and the Economic Freedom Fighters (EFF) to halt a 50 basis point increase in Value-Added Tax (VAT). Scheduled to take effect on the 1st of May, the hike emerges from the 2025/2026 Budget adopted by the government last month, raising questions about the legality and constitutionality of this fiscal decision.
Finance Minister Enoch Godongwana has staunchly defended the tax adjustment, asserting that Section 7(4) of the VAT Act grants him the authority for such temporary adjustments. Advocate Mahlape Sello, representing the Minister, has categorically dismissed claims of unconstitutionality associated with this provision. “Section 7(4) is fundamental to our fiscal policy, and any suggestion of its illegitimacy undermines our approach to financial governance,” Sello stated.
The DA, however, is adamant in its objection, seeking a final court order to annul the VAT increase completely. Furthermore, the party has proposed that particular sections of the VAT Act be expunged, arguing that the current legislative framework empowers the Finance Minister excessively. “Power must reside in the parliament and not be handed down to a single individual,” a DA representative argued, reflecting the party’s broader concern over fiscal accountability.
On the other side of the courtroom, Advocate Karrisha Pillay, representing Parliament in this pivotal case, has firmly maintained that all necessary processes were adhered to leading up to the adoption of the fiscal framework report on the 2nd of April. “Parliament acted within its constitutional parameters. We upheld due process throughout this decision,” argued Pillay, emphasising the legitimacy of the legislative process behind the VAT increase.
The court has assured all involved parties that it will deliver its verdict by the 29th of this month, a decision that could have far-reaching implications for South Africa’s economic landscape amidst rising cost-of-living concerns. With the opposition growing louder and fiscal scrutiny intensifying, this legal dispute encapsulates the contentious relationship between government fiscal policies and the rights of citizens.