DA, EFF welcome court ruling declaring VAT Act provision unconstitutional
Political parties have welcomed a landmark ruling by the Western Cape High Court declaring a key provision of the Value-Added Tax Act unconstitutional, saying the judgment affirms that only Parliament has the authority to change South Africa’s VAT rate.
On Thursday, the court ruled that Section 7(4) of the VAT Act, which allowed the finance minister to alter the VAT rate through a budget announcement, amounts to an unconstitutional delegation of legislative power to the executive.
The challenge was brought by the Democratic Alliance, which argued that the power to impose or adjust taxes belongs exclusively to Parliament.
DA says ruling affirms parliamentary authority
DA Federal Council chairperson Helen Zille said the judgment confirms that taxation decisions must remain in the hands of elected representatives.
Zille said the court had upheld the principle that the finance minister cannot unilaterally change the VAT rate.
"The DA has succeeded in upholding the law that only Parliament, as the representative legislature of the people of South Africa, can change the VAT rate through due process, and that the Minister of Finance cannot raise VAT on their own."
Zille said the judgment reinforces democratic accountability and transparency in fiscal decisions.
"This ruling vindicates our constitutional challenge and reinforces that there can be no taxation without proper parliamentary oversight. It is a case of ‘no taxation without representation’ — Parliament is the representation of voters, and must be the decision-maker on taxation."
She added that the court found the law lacked clear limits governing how the VAT rate could be changed.
"The court confirmed that section 7(4) lacks clear limits governing how the VAT rate could be altered, which undermines the constitutional balance between executive acts and parliamentary supremacy."
The Economic Freedom Fighters also welcomed the judgment, describing it as a victory for constitutional governance.
The party said the ruling affirms its long-standing position that the power to change taxes must rest with Parliament and not the executive.
The case stemmed from Finance Minister Enoch Godongwana’s attempt during the 2025 Budget to increase VAT by 0.5% in 2025 and another 0.5% in 2026, relying on Section 7(4) of the VAT Act.
According to the EFF, the provision effectively allowed the minister to change the tax rate without proper legislative approval.
"This section of the VAT Act, which previously empowered the Minister of Finance to alter the rate of VAT through a unilateral pronouncement, has been an instrument of economic dictatorship," the statement read.
The EFF said the court correctly found the provision unconstitutional because it transferred legislative powers to the executive.
"The Western Cape High Court has therefore correctly found this provision of the VAT Act to be inconsistent with the Constitution of the Republic of South Africa and declared it invalid."
The party said the ruling validates its argument that taxation decisions must be made through democratic processes.
"The ability to increase taxes on citizens should be determined by their democratically elected public representatives and should not be determined by an individual."
Parliament given two years to fix law
Despite declaring the provision invalid, the court suspended the order of invalidity for 24 months to allow Parliament time to amend the legislation.
During this period, lawmakers are expected to correct the constitutional defect and ensure that any future VAT changes occur through a proper legislative process.
The ruling follows months of political and legal disputes over the proposed VAT increase announced during the 2025 national budget, which would have raised the tax rate from 15% to 16% over two years.
The proposed hike was eventually withdrawn following opposition from political parties and legal challenges.
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