EFF, DA challenge VAT hike and fiscal framework in court

The Western Cape High Court is hearing the court case brought by the Democratic Alliance (DA) and the Economic Freedom Fighters (EFF) on the Finance Minister’s 0.5 percentage point VAT increase.

The two parties took their battle against the VAT increase to the court, saying Parliament erred in its decision to adopt the Fiscal Framework Report, which paves the way for the increase.

Both parties argue that the increase will have a dire impact on already struggling consumers in South Africa. They further say that a VAT increase would harm businesses, poor South Africans, and cause job losses.

The EFF wants the Western Cape High Court to suspend the fiscal framework report that was adopted some weeks ago leading to tabling of the 2025 budget by the Finance Minister.

Advocate Michael Bishop is representing the DA while Advocate Tembeka Ngcukaitobi is representing the EFF.

Advocate Thembeka Ngcukaitobi has made the submission arguing that the fiscal framework report in question contains a number of irregularities.

“Then what is the court supposed to do? We submit that it is inevitable that a relief should be given to the EFF and the DA. The question is whether interim relief on the fiscal framework or final relief, if asked for the interim relief. As far as I understand it, an interim relief might not be appropriate because it might sterilise fundamental processes.”

VIDEO | DA, EFF challenge VAT increase in Western Cape High Court:

Both these political opponents the DA and EFF are describing the VAT increase as unlawful and farcical.

“Our case is that the DA didn’t lose in Parliament. Parliament followed an unlawful process,” says Bishop.

While the EFF is seeking temporary relief to suspend the pending VAT hike – the DA is asking the court to make a final order scrapping the increase in its entirely, while also calling for a section of the relevant legislation to be struck from the statutes completely.

The party claims that section 74 of the VAT Act gives the Finance Minister too much power. Lawyers for Finance Minister Enoch Godongwana disagree.

Advocate Mahlape Sello for Finance Minister, Enoch Godongwana says, “The unconstitutionality of Section 74 is non-existent.”

Advocate Priscilla Pillay, who is representing Parliament, says the institution followed all the due processes, which led up to the vote in favour of the adoption of the fiscal framework report on the second of April. “Vote in the Committee carried by majority.”

The issue comes in with Action SA and Build One South Africa’s conditional support of the report. The parties agreed to vote with the ANC, only if Treasury comes up with alternatives to the 0,5 percentage increase.

The 1st May VAT increase deadline is now a sticking point politically, as well as legally, with the full bench of judges in the High Court also pointing out the validity of these conditions.