US EditionVAT Increases: Court Rules Parliament Must Clip Finance Minister’s Wings
The court ruled Section 7(4) of the VAT Act grants excessive power to the finance minister and suspended the invalidation for 24 months to allow parliamentary reform.
- Judge Matthew Francis delivered the ruling on Thursday that the Western Cape High Court in Cape Town declared Section 7 of the Value-Added Tax Act 89 of 1991 invalid, with Judges Judith Cloete and James Lekhuleni concurring.
- Following budget announcements that proposed VAT increases, the Democratic Alliance brought the case last year arguing Section 7 allowed ministerial VAT changes from the 15% rate.
- The court examined the mechanism and found VAT increases are practically irreversible, as taxpayers cannot reclaim amounts paid during any ministerial-imposed period, with no statutory caps or limits.
- The court referred the case to the Constitutional Court for confirmation, and Parliament has 24 months to remedy the legislation while the order is suspended.
- The court said the judgment strengthens accountability in fiscal governance and curtails the minister's unilateral tax power, directly affecting the tax burden on every consumer of goods and services in South Africa.
11 Articles
11 Articles
South Africa: Court Rules Parliament Must Decide Value Added Tax Changes
The Western Cape High Court ruled that the Finance Minister cannot change the Value Added Tax rate because the Constitution gives that power only to Parliament. The court gave Parliament 24 months to fix the Value Added Tax law after finding that a section of the act wrongly handed tax powers to the executive.
Enoch Godongwana stripped of power to change VAT rate
The Democratic Alliance (DA) has welcomed a ruling by the Western Cape High Court declaring section 7(4) of the Value-Added Tax Act unconstitutional. The court found that the provision improperly allowed Minister of Finance Enoch Godongwana to change the VAT rate through a budget announcement, ruling that such powers must remain with Parliament. Confirms its argument According to the DA, the judgment confirms its argument that taxation powers ca…
Vat Act section declared invalid as court finds it gives finance minister too much power
The Western Cape High Court in Cape Town has declared Section 7(4) of the value-added tax (Vat) Act unconstitutional and invalid in a judgment handed down in favour of the Democratic Alliance (DA). The DA brought the application last year as part of a legal challenge to Section 7(4), which allows the finance minister to change the Vat rate – currently at 15% – through an announcement in the national budget. Under the provision, the new rate take…
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