DA, EFF welcome court ruling against unilateral VAT powers of finance minister

The Democratic Alliance (DA) and Economic Freedom Fighters (EFF) have welcomed a court ruling that has declared the unilateral powers of the finance minister to determine the valued-added tax (VAT) rate as unconstitutional.

The case was brought by the DA in 2025 when Minister of Finance Enoch Godongwana attempted to increase the VAT rate from 15% to 15.5% as part of his first attempt at tabling a national budget.

But the Western Cape High Court said although Parliament has 12 months to consider and confirm the minister’s proposed tax hike, if it were to decide to reverse it, it would be too late for the public to recover the tax already paid.

In considering the matter, the court said at issue is not whether the finance minister is the correct person to set the tax rate, but whether the Constitution permits Parliament to delegate this power.

A full bench of the court said the DA has vindicated an important constitutional principle, that the power to impose, reduce or abolish taxes resides with Parliament.

It said this power may not be delegated to the executive to the extent that it bypasses the money bill procedure.

DA federal council chair, Helen Zille, said the judgment strengthens accountability in fiscal governance and ensures that any future changes to the VAT rat must follow proper legislative processes.

“The DA was right all along to say that it was unconstitutional and unlawful for Mr Godongwana to seek to raise the VAT and it was right for the DA to oppose it so strongly.”

The court’s declaration of the invalidity of Section 7(4) of the VAT Act is subject to confirmation by the Constitutional Court.

Parliament has been given 24 months to amend the VAT Act.