By Thapelo Molefe
The Western Cape High Court has ruled that the power to change South Africa’s Value Added Tax (VAT) rate lies with Parliament and not the Minister of Finance, declaring a key section of the VAT Act unconstitutional.
The judgment found that Section 7(4) of the Value-Added Tax Act improperly gave the finance minister the authority to alter the VAT rate through a budget announcement without parliamentary approval.
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The court ruled that this amounted to an unlawful delegation of legislative power to the executive, stating that decisions on taxation must remain with Parliament as the country’s lawmaking body.
The court, however, suspended the declaration of invalidity for 24 months to give Parliament time to amend the law.
The case was brought by the Democratic Alliance (DA), which argued that the Constitution requires tax decisions to be made by elected representatives rather than the executive.
DA Federal Council chairperson Helen Zille said the ruling confirmed that only Parliament has the authority to determine taxes.
“The power to determine taxes cannot be delegated to the executive. Only Parliament can change the VAT rate through due process,” Zille said in a statement on Friday.
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The challenge followed an attempt by Finance Minister Enoch Godongwana to increase VAT during the 2025 budget process by 0.5 percentage points in 2025 and a further 0.5 percentage points in 2026 using the disputed provision in the law.
The Economic Freedom Fighters (EFF) also welcomed the judgment, saying it affirmed its long-standing argument that only Parliament should have the authority to alter taxes.
EFF spokesperson Sinawo Thambo said the ruling confirmed that the ability to increase taxes must rest with elected representatives.
“Taxation should never be imposed unilaterally by the executive. It must be determined by Parliament,” Thambo said.
The African Congress for Transformation (ACT) also welcomed the ruling, describing it as an important step in protecting democratic accountability in fiscal policy.
ACT spokesperson Mohau Khumalo said the judgment reaffirmed that taxation decisions must reflect the will of the people through their elected representatives.
Parliament now has two years to amend the VAT Act to ensure that any future changes to the VAT rate follow the proper legislative process.
