Recent reports indicate that the Western Cape High Court hear an urgent application from the Democratic Alliance (DA) and Economic Freedom Fighters (EFF) seeking to halt the pending VAT increase. The application challenges the legality of the VAT hike announced in March as part of the revised fiscal framework.
The legal challenge comes amid growing tension between the DA and the ruling African National Congress (ANC), following what opposition parties view as an unauthorised and burdensome tax move. Several parties within the Government of National Unity (GNU) have voiced strong opposition and joined the court application filed earlier in April.
Minister of Finance Enoch Godongwana, however, has maintained that it is too late to revise the fiscal framework, which includes the 0.5% VAT hike set to take effect on 1 May.
Economist Ulrich Joubert weighed in on the matter, stating: “It depends on what the court will say about this situation. If the court finds that the VAT increase is illegal due to procedural issues in Parliament, then the Minister won’t be able to proceed. However, many companies have already adjusted their systems for the VAT hike. Reversing this would be messy and could incur additional costs.”
He added, “So many companies have advised that tariffs and debit orders will increase by 0.5% from 1 May. In a certain sense, many have treated it as a done deal.”
The outcome now rests in the hands of the judiciary.
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