‘Decision has been made’: Godongwana argues VAT hike can’t be blocked, opposes DA’s interdict

Finance Minister Enoch Godongwana has insisted that the planned 0.5% increase in value-added tax (VAT) cannot be halted at this stage, even as the Democratic Alliance (DA) seeks to stop it through the courts.

On Wednesday, Godongwana submitted an answering affidavit to the Western Cape High Court in Cape Town in response to the DA’s legal challenge against the VAT hike, set to take effect on 1 May.

The minister announced the VAT increase during his 2025 Budget Speech, invoking Section 7(4) of the VAT Act.

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This section permits a tax rate change to take immediate effect following the minister’s announcement – even before the full budget process in Parliament is completed.

The DA has since launched an urgent application to interdict the increase and is also seeking to overturn Parliament’s adoption of a committee report on the fiscal framework.

The party is further asking the court to declare Section 7(4) of the VAT Act unconstitutional.

The Economic Freedom Fighters (EFF) have since joined the case.

Godongwana opposes DA’s interdict against VAT hike

In his affidavit, Godongwana dismissed the challenge, saying the parties’ attempt to set aside the adoption of the fiscal framework “lacked merit”.

“The fiscal framework is not legislation. Nor does it impose taxes. It is a parliamentary resolution that sets out revenue proposals, expenditure estimates and related fiscal targets over the medium term,” he said.

He maintained that the adoption or amendment of the fiscal framework has no bearing on the legality of his decision to implement the VAT increase.

Despite his argument, the minister highlighted that he would abide by the court’s decision in this regard.

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Godongwana, however, opposed the request for an interdict, arguing that his VAT announcement remains legally effective.

“The decision to introduce the VAT rate increase has been made,” he said, adding that the increase “cannot be interdicted at this stage” and the relief sought was “moot”.

The minister contended that the DA had not met the requirements necessary for an interim interdict.

“They have failed to demonstrate a prima facie right to the relief sought.”

“They misinterpret section 7(4) of the VAT Act and, as a result, launch an ill-conceived constitutional challenge. They have failed to establish a well-grounded fear of irreparable harm,” the affidavit further reads.

VAT Act challenge

Godongwana also took issue with the DA’s interpretation of the VAT Act.

He emphasised that the party’s constitutional challenge was “misdirected” and “bad in law”.

“The DA submits that section 7(4) permits the minister of finance to amend section 7(1) of the VAT Act.

“This is plainly wrong. The provision does not confer on the minister of finance the power to amend section 7(1).”

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“Instead, it grants me temporary and conditional authority to adjust the rate for 12 months, subject to Parliament’s power to enact legislation.”

“When I, as the minister of finance, announce the alteration, section 7(1) remains the same and continues to exist until amended by Parliament. There is no legislative amendment.”

Godongwana on EFF’s VAT increase challenge

The minister also pointed out that the EFF’s stance differs from the DA, as the red berets have not sought to suspend his announcement of the VAT hike itself.

“It also appears that the EFF’s submissions are premised on a view that my VAT rate announcement is unlawful because of the allegedly unlawful adoption of the fiscal framework. That view has no legal basis.”

He has called for both the DA and EFF’s applications to be dismissed with costs.

“I further seek an order for costs, including costs of three counsel.”