JOHANNESBURG, Gauteng — The Constitutional Court has officially reserved judgment in the Democratic Alliance’s VAT Act challenge, a landmark legal battle questioning the authority of the Finance Minister to alter national tax rates without prior parliamentary approval. The apex court is currently tasked with confirming a previous Western Cape High Court ruling that declared the controversial legislative provision constitutionally invalid.
At the heart of the matter is Section 7, Subsection 4 of the VAT Act. The Democratic Alliance (DA) argues that this provision grants the Finance Minister unfettered, unilateral powers to change the VAT rate at will, bypassing the national legislature. According to the DA’s legal counsel, this creates an irreversible scenario where South African citizens and businesses are subjected to tax hikes without the ability to claim refunds once the money has been spent.
The legal dispute traces its roots back to the contentious national budget proceedings of 2025. Following two failed attempts by the Finance Minister to table the budget, a third attempt succeeded but introduced a highly disputed 0.5% VAT increase. The DA noted that this specific increase exposed deep fractures within the Government of National Unity and served as the catalyst for approaching the Western Cape High Court to seek a declaratory order of constitutional invalidity.
While the Western Cape High Court agreed with the DA and declared the provision unconstitutional, it simultaneously suspended the order of invalidity for 24 months to give Parliament time to remedy the legislative defect. The DA is now asking the Constitutional Court to overturn this suspension. Under Section 172 of the Constitution, any declaration of invalidity made by a High Court must be confirmed by the Constitutional Court to carry legal force. The opposition party is seeking an immediate ruling or a “reading in” of new provisions to cure the statute’s constitutional flaws without delay.
In defense of the provision, National Treasury and the Finance Minister argued that the clause is essential for maintaining a smooth legal framework. They maintained that allowing the Minister to act unilaterally ensures sound fiscal management and economic stability while Parliament takes the time necessary to formally draft and pass tax legislation.
During the proceedings, the bench probed the nuances of the state’s arguments. Justice Jodi Kollapen questioned the legal distinction between the VAT Act provision and the national fuel levy. The Justice noted that while the fuel levy also lacks a refund mechanism for consumers, it includes built-in cushions for motorists and directly contributes to the Road Accident Fund (RAF).
The DA’s legal team also heavily emphasized the socio-economic impact of the tax hikes, arguing that the increases disproportionately affect the poorest citizens and rural communities who are taxed on every basic transaction.
With arguments from both the DA and the state now concluded, the Constitutional Court has reserved judgment. The impending ruling will ultimately determine the balance of fiscal power between the executive and the legislature, and whether the Minister retains the authority to unilaterally adjust the nation’s tax rates.
