The Western Cape High Court has ruled to suspend the VAT increase announcement made last month, preventing the tax hike from taking effect on May 1.
In a significant ruling, the court also overturned the resolution of the National Assembly adopting the report of the Joint Standing Committee on Finance on the Fiscal Framework and Revenue proposals adopted earlier this month.
Finance Minister Enoch Godongwana has been ordered to pay 50% of the legal costs, including costs to two senior counsel.
National Assembly Speaker Thoko Didiza and National Council of Provinces Chairperson Refilwe Mtshweni-Tsipane have also been ordered to pay 50% of the legal costs, including costs to two senior counsel.
The court’s order is subject to Part B of the DA’s application, which seeks to have the VAT Act declared unconstitutional.
Meanwhile, the Democratic Alliance (DA) and Economic Freedom Fighters (EFF) have filed supplementary papers in the multilayered court case.
The DA argues that the Finance Minister’s announcement that the VAT increase will be reversed is not enough, and that this should only happen once the VAT Bill has been passed by Parliament.
The EFF wants to force Parliament to restart the 2025 budget process.
Parliament has argued in its court papers that the Finance Minister derives his powers to amend the VAT rate from the VAT Act, and therefore, there is no need for the court to set aside or suspend the Fiscal Framework.
The matter is back in court on Tuesday.
