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The DA will continue with Part B of its application to have the VAT act declared unconstitutional.
Minister of Finance Enoch Godongwana. Picture: Jacques Nelles
Finance Minister Enoch Godongwana will now have to table the budget instruments from scratch with new revenue proposals.
This comes after the Western Cape High Court on Sunday officially set aside the VAT reversal, just a few days after Godongwana’s statement and legislation to suspend the 0.5 percentage point VAT increase.
The DA and EFF approached the court to have the VAT increase announcement by Gondongwana including the adoption of the Joint Standing Committee on Finance’s report by the National Assembly (NA) and the National Council of Provinces (NCOP) set aside.
Godongwana dropped his opposition to the case, saying in an affidavit filed on Sunday morning that he had done so after realising that he had no political support for a VAT increase.
This was after he received a letter from National Assembly Speaker Thoko Didiza asking him to table alternative revenue proposals by 2 May.
“I want to make clear that the reason for doing so is due to the recent events [opposition against the hike and a letter from the Speaker] and not as a concession of alleged unconstitutionality,” Gondongwana wrote in his affidavit.
ALSO READ: Western Cape High Court orders scrapping of the 0.5% VAT increase
DA Federal Chairperson said the court’s decision is a victory for South Africans.
“This a job for Parliament and I know that the whole Parliamentary programme has to be revised. So that is a big deal, it’s not easy to revise the entire Parliamentary programme to get a new fiscal framework through the portfolio committee and then through the plenary.
“So, Parliament going to have its work cut of for it and that will be in their hands,” Zille said.
Zille added that the DA will continue with Part B of its application to have the VAT act declared unconstitutional.
“We will continue with Part B of our application, that is to have clause 7.4 of the VAT Act declared unconstitutional because it gives the minister the power to impose a tax which only Parliament can do under the Constitution.”
In order, the court said Gondongwana’s announcement on 12 March 2025 made under section 7(4) of the VAT Act whereby the rate was adjusted by 0.5 percentage point to take effect on 1 May 2025 and the second 0.5 percentage point on 1 April 2026 is “suspended pending the passing of legislation regulating the VAT rate or the final determination of Part B whichever occurs first.”
ALSO READ: Godongwana consents to court order against VAT increase
Although Sars Commissioner Edward Kieswetter was listed as a respondent in the court case, he welcomed the matter, saying “it is an important order that provides clarity to Sars to effectively and efficiently administer the VAT Act”.
“It also has practical implications for consumers and VAT vendors charged with managing VAT.
“The court’s order suspends the 0.5 percentage point increase that was originally announced to come into effect on 1 May 201,5, and there is, therefore, no basis for VAT vendors to implement an increase of VAT rate,” Kieswetter said.
ANC national spokesperson Mahlengi Bhengu-Motsiri said the court has made no decision on the merits of the application that had been brought before by the DA and EFF.
“Parliament is now expected to pronounce on the way forward on the processing of the envisaged changes to the revenue proposals and the expenditure adjustments.”
The EFF on Sunday said party leader Julius Malema will address a media briefing on Monday following the Western Cape High Court order which suspended the 0.5% VAT increases and set aside the 2025 Fiscal Framework and revenue proposals.
ALSO READ: DA files supplementary affidavit to block the proposed VAT hike
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