The VAT rate is set to rise from 15% to 15.5% on May 1, with a further increase to 16% anticipated in April 2026, a move the Treasury expects will add roughly $717 million  to the national fiscus.

But the Democratic Alliance (DA) is mounting a legal challenge, arguing that the hike was adopted without proper parliamentary oversight. The opposition party is seeking to overturn the adoption of the fiscal framework approved by a joint sitting of Parliament last month. That framework, based on recommendations from the standing and select committees on finance, lacks clear evidence of formal acceptance or amendments by political parties, the DA claims.

“This is an urgent application based on two key legal points,” explained Cameron Phillips, a Senior Associate at Rule Legal. “First, the DA wants the adoption of the fiscal framework declared invalid. Second, and more significantly, it is asking the court to suspend the implementation of the VAT hike.”

That second leg of the case also calls for an order preventing the SA Revenue Service from collecting the increased VAT, should the hike proceed.

For the interdict to succeed, Phillips noted, the DA will have to meet a high bar.

“In urgent applications like this, the applicant must show they have a prima facie right, in other words, a credible right on the face of it. They also need to demonstrate a real risk of irreparable harm, that the balance of convenience favours them, and that there is no other adequate remedy available.”

A second part of the case, to be argued at a later date, challenges the constitutionality of Section 74 of the VAT Act. According to the DA, this section gives the finance minister excessive power to implement tax increases without full parliamentary approval.

While the VAT hike has faced considerable political resistance, some experts believe its economic impact will be relatively modest. Economist Dr Azar Jammine said that although public backlash is expected, the broader concern is the potential political fallout.

“What’s more worrying than the VAT increase itself is what it could mean for the future of the government of national unity,” Jammine said. “If the ANC ends up abandoning its centrist allies in favour of more populist, left-leaning partners, we could see fiscal discipline thrown out the window and that risks fuelling inflation, ballooning public debt, and destroying investor confidence.”

As of now, no major political party has publicly backed the VAT increase.

The Cape High Court is scheduled to hear the DA’s urgent application on Tuesday.

--ChannelAfrica--