By Simon Nare
A showdown over value-added tax is looming in the Western Cape High Court on Tuesday, with the Democratic Alliance dragging Finance Minister Enoch Godongwana to court to interdict the increase from taking effect on 1 May.
The DA and the Economic Freedom Fighters have formed an unlikely team to stop the minister from hiking VAT after the adoption of the budget framework on 3 April in the National Assembly.
Both parties have argued in court papers that the process followed was unprocedural and, therefore, the report should be set aside and declared null and void.
But Godongwana hit back in responding papers, saying the two parties have premised their arguments on the wrong interpretation of the law and, therefore, their cases should be dismissed.
Tuesday’s hearing will deal with the interdict to put the brakes on the increase.
The DA’s heads of argument say that there is a precedent ruling on the power to hike tax and that power cannot be delegated to the executive. It argues that the minister is empowered by law to alter the VAT rate, not regulate it.
“Yet the minister has tried to exercise his unconstitutional section 7 (4) power. He has announced an increase of the VAT rate to 15.5% from May 1, 2025. If it comes into effect, it will be irreversible; it is not possible to return VAT to consumers who would have overpaid for every good and service.
“The impact will be felt most severely by those with the least to spend. The damage to the rule of law and the separation of powers will be irreversible,” the DA argues in its papers.
The EFF said in a press statement on the eve of the showdown that the adoption of the framework was a betrayal and burden to the poor, and smaller parties such as ActionSA, Bosa and Rise Mzansi had been duped by the ANC in supporting the budget framework, which contained the VAT hike.
“The EFF court challenge, therefore, is an important avenue to rescue ordinary South Africans from the VAT hike… which will see those who are employed paying more,” said party’s treasurer general Omphile Maotwe.
Godongwana is set to argue that it is too late to interdict the tax hike as the increase has already been communicated to businesses, who have in turn communicated this to consumers.
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