DA in urgent court bid to interdict VAT hike on 1 May

The Democratic Alliance (DA) has filed an urgent application in the Western Cape High Court, seeking to overturn Parliament’s adoption of the 2025 fiscal framework and block Finance Minister Enoch Godongwana’s decision to increase the Value-Added Tax (VAT) rate.

The party argues that the parliamentary process was unlawful and that the Minister’s decision to raise VAT is unconstitutional.

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DA Federal Council Chairperson Helen Zille speaks outside the Western Cape High Court on 3 April where the party filed urgent court papers in a bid to interdict the 1 May VAT hike, amongst others

1. DA Federal Council Chairperson Helen Zille speaks outside the Western Cape High Court on 3 April where the party filed urgent court papers in a bid to interdict the 1 May VAT hike, amongst others

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Legal Challenge in Two Parts

Led by DA Federal Council Chairperson Helen Zille, the application seeks relief in two stages:

Part A: The DA wants Parliament’s adoption of the fiscal framework set aside and the VAT increase—set to take effect on 1 May—suspended.
Part B: The party is challenging the constitutionality of Section 7(4) of the VAT Act, which allows the Minister to adjust VAT rates without prior parliamentary approval.

The VAT increase, announced in the 2025 Budget Speech on 12 March, proposes a 0.5% hike in the current financial year and another 0.5% increase next year.

Key Issues Raised by the DA

Unlawful Parliamentary Process

The DA contends that the Standing and Select Committees on Finance failed to comply with the Money Bills and Related Matters Act, which requires:

Public hearings before approving the fiscal framework.
A clear, recorded statement on whether the framework was accepted or amended.

According to the DA, the final vote never took place, and the statement adopting the fiscal framework was inserted after the meeting ended.

Constitutionality of Section 7(4) of the VAT Act

The DA argues that Section 7(4) unlawfully transfers Parliament’s exclusive power to impose taxes to the executive. Under this provision, the Minister can alter VAT for 12 months simply by announcing it in the budget, with Parliament only required to approve it later.

The DA also points out that VAT increases are irreversible—consumers cannot claim refunds for the extra tax paid, making this decision particularly impactful.

Impact on Consumers

The DA warns that the VAT hike will:

Increase the cost of goods and services, placing further strain on South African households.
Worsen food insecurity and financial pressures, especially for low-income earners.
Violate constitutional rights, including access to adequate food and healthcare.

Parliamentary and Political Context

The 2025 fiscal framework was passed on 2 April by both the National Assembly and the National Council of Provinces (NCOP), despite fierce opposition.

The DA, Economic Freedom Fighters (EFF), MKP and FF Plus voted against it.
The ANC, ActionSA and smaller parties supported it.
The final vote in the National Assembly was 194 in favor, 182 against.

The DA alleges that ActionSA mistakenly believed their proposal to reconsider the VAT hike would prevent the increase. However, the DA argues that the Minister’s decision will take effect regardless of non-binding recommendations from Parliament.

Urgency of the Court Application

With the VAT increase set to take effect on 1 May 2025, the DA is pushing for urgent interim relief to prevent what it calls an unconstitutional tax hike that cannot be undone once implemented.

The party also warns that if the fiscal framework adoption goes unchallenged, it will set a dangerous precedent, undermining the integrity of South Africa’s budget process.

Relief Sought in Court

Part A:

An order setting aside Parliament’s adoption of the fiscal framework.
A suspension of the VAT increase pending the outcome of Part B.

Part B:

A declaration that Section 7(4) of the VAT Act is unconstitutional.
A ruling that the VAT increase must be reversed.
A retrospective declaration ensuring that the 2018 VAT increase remains unaffected.

Meanwhile, Finance Minister Enoch Godongwana is expected to table a tax amendment bill on Friday to debate the VAT increase.

The Minister insists that the hike will mostly impact higher-income earners, while lower-income households will be cushioned through expanded benefits.

At the same time, the ANC has signaled a willingness to explore alternative revenue measures, including a potential reconsideration of the VAT increase, aligning with ActionSA’s recommendations in the Standing Committee on Finance.

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