By Thebe Mabanga
Finance Minister Enoch Godongwana has formally set in motion the process to revere the proposed 0,5% VAT hike, but the process faces both legal and technical challenges, starting with the fact that the minister has also withdrawn the bills that underpin the entire process.
Parliament has confirmed that the minister has tabled the Rates and Monetary Amounts and Amendment of Revenue Laws Bill, or Rates Bill, which reverses the VAT hike by leaving the rate unchanged at 15% from 1 May.
Communication from National Assembly Speaker Thoko Didiza’s office confirms that Bill has already been referred to the Standing Committee on Finance for processing. But at the same time, Godongwana has withdrawn the 2025 Appropriation Bill and Division of Revenue Bill, which are critical pillars of the budget.
The EFF has sought to challenge this anomaly.
In a letter to the Speaker’s office, the Red Berets point out that the 2 April vote that approved the Fiscal Framework and Revenue proposals is the subject of a legal challenge by the EFF, with judgment expected next week Tuesday.
The EFF then generously argues that even if the 2 April vote is allowed to stand, the withdrawal of the Division of Revenue Bill by the minister undermines the entire process.
“This alone places the processing of the Rates Bill on constitutionally shaky ground, with serious risks for the legal validity of any amendments to tax rates or related revenue matters.” the party said in its letter.
The judgment will also pronounce on a challenge brought by the DA, which challenges a section of the VAT Act that gives the minister unilateral powers to announce a change in the VAT rate. That judgment will proceed unless an out of court settlement is reached with the DA.
“It is the EFF’s considered view that Parliament should not process a Bill so central to the 2025 Budget while the legality of the fiscal framework remains under judicial scrutiny,” the EFF notes, adding that to do so “would risk further undermining the credibility and integrity of the legislative process”.
The country’s fourth largest party then proposes that “a brief pause to await the court ruling scheduled for the 29th of April 2025 would not delay Parliament unreasonably but rather demonstrate institutional respect for legal processes and enhance constitutional governance”.
The EFF points out that the R75 billion revenue shortfall over the next three years now confirmed by Treasury alters the Division of Revenue and violates the legislative requirement that revenue must be consistent with planned spending.
It has called for a meeting of all party leaders to resolve the crisis.
The party has also called for a workshop of the Standing (National Assembly) and Select (National Council of Provinces) Committees on Finance and Appropriations to clarify timelines of approving the various instruments.
A scenario that has been presented is that since the SA Revenue Service and company systems had been geared to process the new rate, the increase will be allowed to kick in while Parliament processes the reversal, a move that now involves tabling a revised budget, and then later in the tax year process rebates and refunds on VAT claims for the months that the higher VAT would have been in place.
The speaker’s office could not be reached for comment, and Parliament is due to go on recess next week.
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