The Western Cape High Court will hear an urgent application on Tuesday to interdict the impending Value Added Tax (VAT) increase, scheduled to take effect on May 1.
The application is brought by the DA and supported by the EFF, who are challenging the legality of the tax hike announced by Finance Minister Enoch Godongwana during his budget speech last month.
The DA argues that the 0,5 percentage point VAT hike will have a negative impact on the economy, particularly on struggling South African households. According to the party, the increase will further escalate the cost of living, disproportionately affecting the poor and vulnerable.
“The VAT hike is a regressive tax that will hurt the poor and vulnerable the most,” the DA stated in its court papers.
The DA’s court action challenges the adoption of the 2025 Fiscal Framework and Revenue Proposals, which include the VAT hike.
The party claims that the decisions taken by the National Assembly and National Council of Provinces (NCOP) were “fundamentally flawed” and “unlawful”.
The DA has challenged the constitutionality of section 7(4) of the VAT Act, which allows the Minister of Finance to adjust the VAT rate. Godongwana, in his responding papers, argued that the DA’s challenge is “misdirected” and based on a “fundamental misinterpretation” of the law.
“The DA is taking legal action to prevent what it believes to be an unjustified burden on already struggling South African households. The party contends that the increase will further escalate the cost of living, disproportionately affecting the poor and vulnerable.
“A DA delegation will attend the court proceedings and address supporters and the media beforehand,” the DA said in a statement.
The EFF has applied to join the legal action, citing the need to protect the democratic character of Parliament and ensure that processes determining the use of public resources are not reduced to unlawful and illegal processes.
EFF national spokesperson Sinawo Thambo said: “The court application is a necessary and principled intervention to protect the democratic character of Parliament.”
The party’s Treasurer General Omphile Maotwe said their intervening application seeks to set aside the adoption of the 2025 fiscal framework and revenue proposals.
“This is a betrayal and burden to the poor and must be stopped. It could have been stopped if some political parties had not allowed themselves to be used by the ANC to pass a budget with VAT hikes,” Maotwe said.
Godongwana has defended his decision to increase the VAT rate, warning that suspending the increase would have “severe and far-reaching” consequences for the country. According to Godongwana, halting the VAT increase would cause a loss of R13,5 billion in revenue, leading to either spending cuts or increased borrowing.
“The consequences would be severe and far-reaching. The government would be immediately forced to cut spending or increase borrowing. Both options carry risks. Spending cuts would likely fall on essential education, healthcare, housing, and social protection programmes. These disproportionately affect the poor and vulnerable,” Godongwana stated in his affidavit.
Godongwana also criticised the EFF’s application, saying it is “unsupported” and “unclear”. He believes that Parliament will have the opportunity to debate and vote on the VAT increase and that a majority will support it as a “responsible” fiscal step.
“The provision does not confer on the Minister of Finance the power to amend section 7(1). Instead, it grants me temporary and conditional authority to adjust the rate for 12 months, subject to Parliament’s power to enact legislation,” Godongwana explained.
Meanwhile ActionSA, who helped the ANC pass the VAT hike and the 2025 Budget, said on Monday that the DA’s deputy finance minister Ashor Sarupen knew about the VAT hike.
“ActionSA can today reveal — through a damning parliamentary reply — that the DA’s Deputy Minister of Finance, Ashor Sarupen, was intimately involved in the budget process, particularly in drafting the original February 19 Budget speech which included the deeply unpopular 2 percentage point VAT increase, as well as the subsequent revision to the split 1 percentage point increase, despite their denials,” Action SA said in a statement.
“Yet in recent weeks, the DA has cynically weaponised this very VAT hike in a desperate attempt to salvage its political image and to extract more influence in the GNU.
“Far from acting in the public interest, the DA has waged an internal war in the GNU — prioritising extortionist power plays and Ministerial positions in the GNU over the financial well-being of millions of struggling South Africans.”
