By Simon Nare
Finance Minister Enoch Godongwana has dismissed the Democratic Alliance court challenge to set aside the budget fiscal framework as legally flawed and a misinterpretation of the law.
In court papers opposing both the DA and the Economic Freedom Fighters, Godongwana argues that the applications by both parties are not sound.
The two parties argue that the process followed by the National Assembly and the National Council Provinces in adopting the 2025 budget fiscal framework report was unconstitutional and, therefore, it should be set aside and declared invalid.
In the papers filed in the Western Cape High Court on Thursday, the minister said the two parties misunderstood the law on which they premised their arguments to challenge the report or to interdict the value-added tax hike which comes into effect on 1 May.
On the DA challenging his powers to increase the VAT by 0.5 percentage points and then another 0.5 percentage points on 1 April 2026, Godongwana said the announcement was legally within his right as he was empowered by law to do so.
“The relief would be moot. The decision to introduce the VAT increase has been made. My decision to introduce a VAT rate change cannot be interdicted at this stage.
“Since its announcement, the decision has been widely communicated across the country, and businesses and consumers alike have relied on it in planning for the next financial year ahead. The VAT rate is therefore set to increase to 15.5% on 1 May 2025,” the minister said in the court papers.
He said the argument by the DA to challenge his powers to increase VAT during the budget was also legally flawed because in terms of the law, he has the powers to hike taxes temporarily for 12 months to allow Parliament to pass a law or amend it.
If Parliament is unable to pass a law or amend it in the 12 months, then that hike would be reversed and no longer apply.
Godongwana said the decision to permanently implement the 0.5% VAT hike was still going to be taken by Parliament and he was confident that this would get majority support in the legislative house.
“In due course Parliament will consider and debate the proposed legislation, and to the extent that it sees fit, pass or amend it in accordance with the procedures set out in the Money Bills Act.
“The power of the minister of finance to temporarily adjust the VAT rate during the annual budget speech serves as a crucial purpose. Section 7 (4) enables the executive to address urgent budget pressures without permanently altering tax legislation, thus striking a balance agile fiscal management and Parliament’s ultimate authority,” he said.
The minister argued that there needed to be swift executive action because economic conditions could shift rapidly, and the money bill process could take months or years. If the government had to wait for that process to unfold, the state’s finances might deteriorate, or funding of core public services could be jeopardised.
INSIDE POLITICS
