Western Cape High Court to hear urgent VAT increase challenge

THE Western Cape High Court is today expected to hear the urgent application to interdict the impending Value Added Tax (VAT) increase, scheduled to take effect on May 1.

- MASHUDU SADIKE [e-mail]

The application is brought by the DA and supported by the EFF, who are challenging the legality of the tax hike announced by Finance Minister Enoch Godongwana during his budget speech last month.

The DA argues that the 0.5 percentage point VAT hike will have a negative impact on the economy, particularly on struggling South African households. According to the party, the increase will further escalate the cost of living, disproportionately affecting the poor and vulnerable.

The DA has challenged the constitutionality of section 7(4) of the VAT Act, which allows the Minister of Finance to adjust the VAT rate.

Godongwana, in his responding papers, argued that the DA's challenge is “misdirected” and based on a “fundamental misinterpretation” of the law.