The Western Cape High Court has ruled a significant section of South Africa’s Value-Added Tax (VAT) Act unconstitutional, challenging the authority of the National Executive in determining tax changes without parliamentary involvement.
The case stems from the chaos surrounding the National Budget last year when Finance Minister Enoch Godongwana unexpectedly increased the VAT rate from 15% to 17%. The Minister initially withheld the proposed Budget but later introduced a second one, raising the VAT rate to 16%.
Following this, the Democratic Alliance (DA) and the Economic Freedom Fighters (EFF) launched an urgent application to nullify the adoption of the Fiscal Framework by both the National Assembly and the National Council of Provinces. This legal challenge, coupled with negotiations with other Government of National Unity (GNU) members, led to the VAT increase being blocked, with Parliament ultimately passing a third Budget with no VAT hike.
However, the matter was revisited in 2026 when the Western Cape High Court ruled that Section 7(4) of the VAT Act, which grants the Minister the power to alter the VAT rate by announcement in the National Budget, is unconstitutional. This section allowed changes to take immediate effect based on the executive’s decision, with Parliament later tasked with confirming the decision through legislation.
The DA welcomed the ruling, with Helen Zille asserting that it reinforced their argument that taxation powers should not be delegated to the executive. “Taxation powers must remain firmly in the hands of Parliament as the elected representatives of the people,” Zille stated.The court also ordered that Godongwana and South African Revenue Service (SARS) Commissioner Edward Kieswetter pay the DA’s legal costs. The court has suspended the declaration of invalidity for 24 months, granting Parliament time to amend the law.