DA moves to block VAT hike through legal action – The Mail & Guardian

Helen Zille. (Luba Lesolle/Gallo Images)

The Democratic Alliance (DA) on Thursday filed an urgent court application at the Western Cape high court against what it said were procedural and constitutional irregularities in approving a fiscal framework that will probably see an increase in VAT.

The party has also accused the ANC of not negotiating in good faith within the government of national unity (GNU), warning that the VAT hike would exacerbate the country’s cost of living crisis.

Speaking outside the court, DA federal council chairperson Helen Zille and finance spokesperson Mark Burke detailed the party’s bid to interdict the staggered VAT increase proposed by Finance Minister Enoch Godongwana, which would see the first 0.5 percentage point hike take effect on 1 May.

The court filing comes a day after the National Assembly voted by a narrow margin on Wednesday to pass the fiscal framework, despite the DA’s refusal to support it.

In the debate preceding the vote, Burke argued that a recommendation by parliament’s finance committee that Godongwana use the next 30 days to find an alternative to the VAT increase was not worth the paper it was written on.

The ANC secured the budget’s approval with support from ActionSA, Build One South Africa, the Patriotic Alliance, Inkatha Freedom Party, United Democratic Movement and other minority parties. The DA, Freedom Front Plus, Economic Freedom Fighters and Jacob Zuma’s uMkhonto weSizwe party voted against it.  

The DA’s legal case consists of two key elements. The first challenges the process followed by parliament’s committees on finance, which the party says was unprocedural and therefore invalidates the adoption of the fiscal framework.

The second seeks to declare section 7(4) of the Value Added Tax Act unconstitutional, arguing that it improperly grants the finance minister the authority to impose tax increases without full parliamentary approval.

“The DA never only has one plan. We are absolutely determined to stop the VAT hike and we believe this case will expose how the ANC is trying to bypass democratic processes,” Zille said.

The party also criticised ActionSA, which helped secure the ANC commitment to not implement the VAT hike. Zille dismissed this assertion as “delusional”, arguing that the fiscal framework adopted in parliament includes the VAT increase and cannot be undone without proper legislative action.

“We are not in the GNU for blue lights or cars or ministerial homes or status. We are in that GNU for one sole purpose and that is to get South Africa’s economy to grow at the rate it needs to grow in order to absorb more people into productive employment and thereby reduce poverty. That is why we are here,” she said.

“We are not going to play any games that enable the ANC to retain its profligate spending, its extreme wastage — not even do a spending review of, for example, ghost employees in the system, but just continue taxing South Africans till they cannot even put food on the table. So our plan B is to take this to court.”

The DA’s legal challenge comes amid growing tension in the GNU, with the party accusing the ANC of failing to honour coalition commitments. 

Zille said the DA had proposed a comprehensive economic reform package to stimulate job creation and investment but that smaller parties within the coalition government had ultimately sided with the ANC to push through the fiscal framework without necessary conditions met.

Asked whether the legal challenge signals the DA’s intention to leave the government of national unity, Zille said the party’s federal executive would meet to assess its options. But she insisted that the DA would not support any budget that puts additional financial strain on South Africans.

On Tuesday night, President Cyril Ramaphosa told the ANC caucus that the DA would, by implication, be leading itself out of the partnership if it failed to vote for the fiscal and revenue proposals. His remarks were recorded without his knowledge and leaked.

On Wednesday, ahead of the budget vote, Ramaphosa’s office said the president was committed to the GNU, appreciated the work of DA cabinet ministers and preferred for the party to remain part of the coalition, but the budget was a test of its commitment to that pact.

“The president remains committed to keeping the GNU together and, in fact, with the DA’s continued participation,” Ramaphosa’s spokesperson Vincent Magwenya said.

“What the DA does during the budget vote today will determine its own commitment, not only to the GNU, but to the people of South Africa.”