High Court to rule on DA, EFF bid to block VAT hike as Treasury scrambles for solution
The Western Cape High Court will on Tuesday, April 22 (2025), hear an urgent application by the Democratic Alliance (DA) and Economic Freedom Fighters (EFF) to halt the controversial 0.5 percentage point VAT increase set to take effect on May 1.
The legal challenge comes as the National Treasury and South African Revenue Service (SARS) reportedly work behind the scenes to reverse the hike amid mounting political and public opposition.
Court showdown over VAT legality
The DA and EFF are seeking to invalidate Parliament’s adoption of the fiscal framework supporting the VAT increase, arguing that Finance Minister Enoch Godongwana overstepped his authority by unilaterally raising the tax without proper legislative approval.
DA spokesperson Dominique Jeftha confirmed: “The Democratic Alliance’s urgent court application to interdict the pending VAT increase will be heard in the Western Cape High Court on Tuesday, the 22nd of April 2025.”
Godongwana, however, has defended under Section 7(4) of the VAT Act, insisting the move is legally sound. He warned of “severe and far-reaching” consequences if blocked – including the possible termination of the SASSA SRD Grant.
In court papers, he argues that suspending the increase would leave a R13.5-billion budget shortfall, forcing cuts to essential services or increased borrowing.
“If the rate increase is halted now, that revenue will be lost, and the state will be left without the funds needed to meet already-budgeted spending commitments,” Godongwana said in his responding affidavit.
“The major point is this: if the government is denied the ability to raise the additional revenue through the VAT rate adjustment (and section 7(4) is ultimately upheld as constitutional, which I respectfully submit is likely), the government and the public will suffer immense and unnecessary prejudice.”
ALSO READ: ANC Seeks EFF Alliance to Pass VAT increase as DA Opposes Hike
Treasury’s last-minute fix
Meanwhile, the Sunday Times reports that Treasury and SARS are exploring alternatives—potentially revising revenue targets by up to R60 billion SARS—to offset the need for the O.5% VAT hike, as tabled during March 12, 2025, Budget Speech. SARS Commissioner Edward Kieswetter has identified billions in uncollected taxes, including from high-income earners and corporations, as a possible solution.
However, with the May 1 deadline looming, any reversal may come too late, meaning businesses and consumers could face temporary higher VAT rates before potential rebates are issued.
Political firestorm
The EFF and DA remain adamant, with the DA’s Helen Zille calling the hike “unconstitutional.”
Godongwana, however, claims the DA initially supported the increase in government negotiations, saying: “The DA indicated that it was open to a 0.5 percentage point increase in the VAT rate, subject to certain conditions, not relevant to this application, being met. This demonstrates that the DA is not, in principle, opposed to a VAT increase,” his responding affidavit further reads.
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