By Simon Nare
The Western Cape High Court has heard how allowing the proposed 0.5% value-added tax hike will allow the government to tax its citizens unlawfully.
Democratic Alliance legal representative Advocate Michael Bishop, who argued to interdict the tax hike coming into effect on 1 May, said the increase must be shelved until it is debated and approved by Parliament.
Bishop argued that Finance Minister Enoch Godongwana acted unlawfully when he hiked the VAT and had no powers to do so as this rested with Parliament, and not the executive.
Bishop said that the temporary powers given to Godongwana to adjust tax during the budget speech should not translate into powers allowing him to hike the tax because Parliament could amend the law that legally allowed for the taxation.
“It cannot be I submit that Parliament says we sometimes take a while to deal with legislation, therefore, we are gonna delegate this core power of democratic power to the executive when there is legal reason why Parliament cannot act swiftly,” he said.
The DA and the Economic Freedom Fighters have taken the finance minister to court to interdict the VAT hike, and, also set aside the budget framework which they argue was adopted by the National Assembly unlawfully. The two parties want the report declared null and void.
Bishop said that if the hike was allowed to take effect before it was approved by Parliament, it would financially harm ordinary citizens and if the legislative house did not agree with the finance minister, they would not get that money back.
He shot down the minister’s argument that if the hike was halted, the government stood to lose more than R13 billion in revenue for the 12 months, saying Parliament had indicated that it could pass the amended law by June or July.
This would mean that only about R3 billion would have been lost in those months, Bishop told the court.
Advocate Thembela Ngcukaitobi, arguing for the EFF, described the process by the Parliament committees that deliberated on the framework as farcical.
Ngcukaitobi said the irregularities were brough to the attention of Parliament when the EFF wrote a letter to National Assembly Speaker Thoko Didiza. He further argued that even the voting by MPs on the report was unconstitutional.
Ngcukaitobi also submitted that the report was not deliberated on by the committee.
Advocate Mahlape Sello, who was representing Godongwana, said the minister was within his legal right to hike the tax rate.
But Sello was at pains to clarify how the minister was not overriding the legislative powers of Parliament.
She argued that the announcement by the minister “cascades” until Parliament amended the tax act and that the report would be subjected to Parliament before it was accepted or rejected.
“Parliament must pass an act to undo the increase by the minister because that increase has affected the rate,” she argued.
Judgement has been reserved for 29 April.
Meanwhile, the EFF was buoyed by the postponement of the 2025 Division of Revenue Bill by the Standing Committee on Appropriations on Tuesday after considering its report.
“We welcome the decision by the committee to refer the EFF proposal to the Parliamentary Budget Office (PBO), the Financial and Fiscal Commission (FFC), as well as the Minister of Finance, to assess the practicality of the EFF proposal, and we are confident that the outcome will take us in the correct direction towards a revision of the equitable share formula within the current legislation,’ the party said.
The EFF said it made the proposals within the adopted fiscal framework and revenue proposals, even though it believed that the current government spending could be expanded to re-ignite state-led economic growth.
“We will continue to advocate for the expansion of public services towards more expansive service delivery led by internal state capacity and massive industrialization,” it said.
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