EFF accuses Govt of deception in VAT hike

Ngcukaitobi contends that the VAT increase, from 15% to 15.5%, will worsen inequality in South Africa without adequate mitigation measures.

He further claims that both Parliament and the Finance Minister failed to uphold their constitutional duty to protect vulnerable communities.

"If you recall, the solution proposed by the Minister was to zero-rate certain items. However, the Committee explicitly rejected that proposal at point 6.30, stating that zero-rating is a blunt instrument, as poor households still pay VAT on products and services that aren’t zero-rated," said Ngcukaitobi.

Instead, the Committee recommended that the Treasury consider proposals from stakeholders, including the possibility of appointing an independent expert panel to review the list of zero-rated items.

Despite this, zero-rating was dismissed as insufficient to address the inequality exacerbated by the VAT increase they argue.

Ngcukaitobi noted that Parliament's own reports acknowledged the negative impact the VAT hike would have on low and middle-income households but went ahead with the increase regardless.

The Committee expressed concerns about the implications for inequality and urged the National Treasury to assess the equity effects of current fiscal policies and explore more progressive alternatives.

"Across six sections of the report, the Committee explicitly recognized that the 0.5% increase would deepen inequality in a country already ranked the most unequal in the world according to the Gini coefficient.”

"Yet, none of these concerns were addressed before the decision was made," Ngcukaitobi stated.

The advocate further criticized the government's handling of the situation, pointing out that mitigation measures proposed by the Minister were never implemented, and no substantial alternatives were explored.

According to Ngcukaitobi, this constitutes a violation of Section 9 of the Constitution, which mandates the protection of equality.

"Instead of addressing the issue in detail, Parliament's response skirts around it, claiming it’s not part of the case before the court. It’s unclear how they could have reached this conclusion, especially after the EFF raised the issue directly," he explained.

Ngcukaitobi also highlighted that the South African Revenue Service (SARS) had provided viable alternatives to raising VAT, including improving compliance to address the country’s significant tax gap, which is estimated at up to R800 billion annually.

SARS suggested that better enforcement could generate an additional R20 to R50 billion in revenue without burdening the poor.

"Despite these clear alternatives, the Minister and Parliament have ignored them, and the VAT increase remains on the table," Ngcukaitobi added.

Describing the VAT increase as both unconstitutional and deceptive, Ngcukaitobi argued that the government’s rationale for the hike, that it was necessary for additional revenue to meet spending needs, was insufficient, particularly given the viable alternatives.

He stressed that the VAT increase is linked directly to the annual budget and the resolutions passed by Parliament.

"The deception lies in the idea that the VAT increase could change when there was no intention to alter it.”

“Parliament created the impression that this could be revisited, but that was never the case. This isn’t a misunderstanding of the fiscal framework—it’s deception," he said.

Ngcukaitobi concluded by calling for the court to scrutinize the Minister’s actions more closely, stating that there is a strong case for suspending the VAT decision while the issue is reviewed.

He also referenced comments made by Athol Tollip, Action SA, Member of Parliament, who, in a media briefing on April 2, 2025, suggested that the impression of potential changes to the VAT increase was deliberately misleading.

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