Finance Minister Enoch Godongwana has come out in defence of his decision to increase the value-added tax (VAT).
He filed an affidavit in response to urgent legal proceedings brought by the DA and EFF seeking to block the implementation of the tax hike.
The two political parties are challenging resolutions by parliament’s two houses to adopt the 2025 fiscal framework, calling for these resolutions to be set aside.
In his affidavit, Godongwana said that the relief sought lacked merit.
He pointed out that the DA has other legal options available, urging the court to use its discretion to reject the request.
“They have failed to demonstrate that the balance of convenience favours the grant of the interdict sought,” said Godongwana.
“Given the enormous public interest at stake, the balance of convenience favours the dismissal of the relief.”
He stated that the DA has not met the legal requirements needed for the court to grant a temporary interdict against the VAT increase.
According to the minister, the DA misunderstood the relevant section of the VAT Act and based its case on a flawed constitutional claim.
Minister not opposing EFF’s application
He clarified that the affidavit opposes attempts to suspend or interdict the VAT increase announced in March.
“This affidavit is confined to opposing prayers 3 and 4 of the DA’s notice of motion [Part A], in which they seek an order suspending my announcement, on 12 March 2025, to increase the VAT rate by 0.5% with effect from 1 May 2025 and by a further 0.5% with effect from 1 April 2026, as well as an interim interdict preventing the South African Revenue Service from implementing my decision,” said Godongwana.
He said he does not oppose the EFF’s application to intervene but criticised the clarity and legal grounding of part of its application.
“Prayer 5 of the EFF’s notice of motion is difficult to understand. It is unclear whether the EFF seeks merely to interdict the report [which so happens to make reference to a VAT rate increase] or whether the EFF seeks to interdict ‘the introduction of the 0.5 percentage point value-added tax.
“That relief would be moot. The decision to introduce the VAT rate increase has been made. My decision to introduce the VAT rate change cannot be interdicted at this stage.
“I note that, unlike the DA, in their notice of motion, the EFF does not seek the suspension of my announcement. Neither is this addressed in their founding affidavit.”
He emphasised that his VAT announcement remains valid and lawful, regardless of any challenge to the broader fiscal framework.
He noted that Section 7(4) of the VAT Act empowered him, as the finance minister, to make temporary VAT adjustments, which he believes makes the announcement valid.
Legal requirements needed not met
Godongwana also rejected the DA’s interpretation of the VAT Act, arguing that it is wrong that Section 7(4) permits the minister of finance to amend Section 7(1) of the VAT Act, as the DA submitted.
“I believe, as a matter of fact, that when the proposed amendment to section 7(1) is debated, a majority in parliament will support it as a reasonable and necessary fiscal step.
“In any event, this is not a valid legal ground to challenge or set aside a decision made under a constitutionally authorised statutory provision,” he said.
Godongwana continued: “Section 7(4) expressly anticipates that parliament may or may not adopt the proposed legislative amendment.
“The structure of the provision allows me to act and for parliament to decide later whether to confirm or reject the rate change. That is the design of the law.”
He said the DA has not met the legal requirements needed for the court to grant a temporary interdict against the VAT increase.
According to Godongwana, the DA misunderstood the relevant section of the VAT Act and based its case on a flawed constitutional claim.
He added that the DA failed to show there would be serious and lasting harm if the VAT change went ahead and did not prove that the public interest favoured blocking the increase.
