The Constitutional Court is hearing arguments on whether the finance minister should retain the power to increase value added tax without full parliamentary approval, in a case brought by the Democratic Alliance that could reshape how South Africa sets tax rates.
The DA’s legal team presented arguments today at the country’s highest court, asking judges to confirm a Western Cape High Court ruling from March that declared Section 7(4) of the VAT Act unconstitutional.
DA parliamentary leader George Michalakis and national spokesperson Jan de Villiers (MP) attended the hearing alongside party activists.
High Court victory in March
The Western Cape High Court ruled on 5 March that the section giving the finance minister power to change VAT rates unilaterally violated the Constitution. The court found the provision gave the executive branch excessive authority over taxation, which should remain with Parliament.
Judges Matthew Francis, Judith Cloete and James Lekhuleni found that Section 7(4) allowed the minister to announce VAT changes during the budget speech that would take effect immediately for up to 12 months, subject only to later parliamentary approval.
The court identified several problems with this arrangement. The provision lacked clear limits on how much the minister could raise or lower VAT rates, and it did not require prompt parliamentary oversight. Once consumers paid the higher VAT, they could not be reimbursed if Parliament later rejected the increase.
The High Court suspended its ruling for 24 months to give Parliament time to fix the constitutional defect. During this period, the section remains in operation.
Under South African law, any declaration that a law is unconstitutional must be confirmed by the Constitutional Court before it takes effect permanently.
Previous VAT battle
The current legal challenge stems from finance minister Enoch Godongwana’s 2025 budget speech, when he proposed increasing VAT from 15% to 15.5% from May 2025, with a further rise to 16% planned for April 2026.
The DA launched an urgent court application in April 2025 to block the increase. The party argued the VAT hike would harm households already struggling with rising food prices and living costs.
Treasury withdrew the planned increase on 24 April 2025, just days before it was due to take effect, after facing opposition from coalition partners and the prospect of losing in court.
The DA had initially sought to stop a proposed 2% VAT increase in early 2025, which led to the postponement of that year’s budget speech in February. After negotiations, Godongwana proposed the smaller 0.5 percentage point increase in his revised budget, which was also abandoned following the DA’s legal challenge.
Parliamentary power over taxation
In today’s hearing, the DA argued that only Parliament, as the elected representative body, has the constitutional authority to impose or change taxes.
“Taxation is not a ministerial decision, and should not be made unilaterally,” De Villiers said in a statement. “It is a decision that must be subject to proper democratic scrutiny by elected representatives in Parliament.”
The finance minister and the South African Revenue Service have appealed the High Court ruling, arguing that the flexibility provided by Section 7(4) may be necessary in urgent economic situations.
VAT is charged at 15% on most goods and services in South Africa, with certain basic food items zero-rated. The tax affects all consumers, with critics arguing that increases place the heaviest burden on lower-income households who spend a larger proportion of their income on consumption.
The Constitutional Court has not indicated when it will deliver judgment on the matter.
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What the DA proposes
The DA maintains that the power to change tax rates must rest solely with Parliament through proper legislative process, rather than allowing the finance minister to implement changes by decree.
The party argues this ensures democratic accountability, as elected representatives can scrutinise tax proposals and consider their impact on citizens before approving them.
Under the current system challenged by the DA, the minister can announce a VAT rate change that takes effect immediately or within months, with Parliament voting to approve or reject it only later. The DA contends this reverses the proper constitutional order, allowing the executive to tax first and seek permission afterwards.
The party says any changes to the VAT rate should require Parliament to pass amending legislation before the new rate takes effect, ensuring full democratic oversight of taxation decisions.
