Finance Minister

Finance Minister Enoch Godongwana has come out in strong defence of his decision to increase the value-added tax (VAT), filing an affidavit in response to urgent legal proceedings brought by the Democratic Alliance (DA) and the Economic Freedom Fighters (EFF). The two opposition parties are seeking to block the tax hike’s implementation, challenging resolutions by Parliament’s two houses to adopt the 2025 fiscal framework and calling for these to be set aside. In his affidavit, Godongwana argued that the relief sought by the DA and EFF lacks merit, urging the court to reject their request for an interdict while pointing out that the DA has other legal options available.

A Fierce Legal Showdown Begins

The DA and EFF have taken the government to court over the VAT increase, claiming that the parliamentary process to adopt the 2025 fiscal framework was flawed. They argue that the resolutions should be overturned due to insufficient consultation and a rushed timeline, which they say undermined democracy. Godongwana hit back, stating, “They have failed to demonstrate that the balance of convenience favours the grant of the interdict sought. Given the enormous public interest at stake, the balance of convenience favours the dismissal of the relief.” He stressed that the DA has not met the legal requirements for a temporary interdict, accusing them of misinterpreting Section 7(4) of the VAT Act and building their case on a “flawed constitutional claim.”

The minister clarified his stance in the affidavit: “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.” He insists his decision is lawful and grounded in the VAT Act.

Godongwana’s Response to the EFF

While Godongwana does not oppose the EFF’s application to intervene in the case, he questioned the clarity of their demands. “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,” he said. Unlike the DA, the EFF has not explicitly sought to suspend his March announcement, a point Godongwana noted in their affidavit’s favour.

He defended the legality of his VAT hike, saying it aligns with Section 7(4) of the VAT Act, which allows the finance minister to make temporary adjustments. “My decision to introduce the VAT rate change cannot be interdicted at this stage,” he added, reinforcing that the announcement remains valid.

Debunking the DA’s Claims

Godongwana rejected the DA’s reading of the VAT Act, particularly their claim that Section 7(4) does not permit him to amend Section 7(1). “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 argued. He explained that the law’s structure lets him act first, with Parliament deciding later whether to confirm or reject the change. “That is the design of the law,” he said.

The minister also pointed out that the DA failed to prove two key points: that the VAT hike would cause serious, lasting harm, and that the public interest supports blocking it. This, he argued, weakens their case for an interdict.

Why the VAT Hike Matters

The VAT increase has been a hot topic since Godongwana’s 2025 Budget Speech on 12 March. He originally proposed raising VAT from 15% to 17%, but after pushback from coalition partners—especially the DA—he scaled it back to a phased 1% rise: 0.5% starting 1 May 2025, and another 0.5% from 1 April 2026. Even with this compromise, the DA insists any tax hike must be temporary and tied to major economic reforms. The EFF, alongside parties like the MK Party, opposes it outright, saying it hits the poor hardest.

This legal fight reflects deeper cracks in South Africa’s coalition government. After the ANC lost its majority in the 2024 elections, it formed a fragile alliance with parties like the DA. Disputes over policies like the VAT hike and land reform have fuelled tensions, raising doubts about the coalition’s ability to govern effectively.

Economic Stakes and Public Impact

Godongwana’s VAT plan aims to tackle South Africa’s growing debt and fund vital programs like the Social Relief of Distress (SRD) grant, which supports millions of vulnerable citizens. Blocking the hike, he warned, could force cuts to services or more borrowing, with “severe and far-reaching” consequences. Retailers are already tweaking prices ahead of the 1 May 2025 start date, but the court case has cast a shadow of uncertainty.

Public opinion is split. Some experts say the increase is a tough but needed step to fix the country’s finances. Others, including consumer groups, warn it will worsen the cost-of-living crisis, especially for low-income households already stretched thin by rising food and fuel costs.

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