The legal challenge, brought by the Democratic Alliance (DA), threatens to expose deep fractures within the Government of National Unity (GNU) and raises questions about its long-term viability.

The DA seeks an urgent interdict to halt the planned 0.5% VAT increase, due to take effect on May 1, which would raise the rate from 15% to 15.5%. A further increase to 16% is planned for April 2026. The National Treasury estimates the hike could generate approximately $717 million to support the country’s strained fiscus.

In court papers, Godongwana argues the VAT hike cannot be halted at this stage. However, the DA contends that the process followed in adopting the fiscal framework was flawed. It claims that during a joint sitting of Parliament, there was no clear consensus on whether political parties accepted or amended the framework, which was based on reports from the finance committees.

Cameron Phillips, a Senior Associate at Ulrich Roux & Associates, explained the urgency of the DA’s application. “It hinges on two legal points, the adoption of the fiscal framework and the suspension of the VAT implementation, including preventing SARS from collecting the higher rate,” he said.

Phillips noted that for the interdict to succeed, the DA must demonstrate a prima facie right, irreparable harm, and that no suitable alternative remedy exists.

A second part of the case, to be heard at a later date, seeks to declare Section 7(4) of the VAT Act unconstitutional. The DA argues it grants the Finance Minister excessive authority to raise taxes without full parliamentary approval.

Economist Azar Jammine downplayed the economic impact of the VAT increase but warned of greater political risks. “If this dispute causes the GNU to collapse, the ANC may turn to populist allies, risking fiscal discipline, surging debt, currency collapse, and a loss of international confidence,” he said.

--ChannelAfrica--