DA and EFF’s VAT case a test for parliament

The DA and the EFF’s court case to block the 0.5 percentage point VAT hike from kicking in on May 1, now being argued in the Western Cape High Court, is a critical test of how parliament relates to executive decisions.

This is according to DA chief whip George Michalakis, who was briefing reporters outside the court in Cape Town on Tuesday morning, where the procedural legality of the National Assembly’s passage of the fiscal framework and revenue proposals presented by finance minister Enoch Godongwana last month is being challenged. 

“The question we would like the court to answer is whether the minister can announce the VAT increase that finds effect on May 1 before parliament has ratified this, whether he can do this without parliament, the representatives of the people.” 

The court case was a crucial test for the legislature, which spent 30 years as a “rubber stamp” for executive policies. He said a minister unilaterally applying a tax on South Africans before parliamentary approval struck at the heart of the separation of powers in government. 

“Today’s [Tuesday] court case is not only about VAT and the fiscal framework. This is an important part of the fight, but at the core of what we are campaigning for lies something much more important. The ability of individuals to feed their families, pay bills and find a job.” 

Allowing the government to continue spending inefficiently and wastefully while imposing new taxes was less undesirable than the finance minister being compelled by the courts to draft a fresh fiscal framework and revenue proposals, effectively redrafting the budget. 

“If we do not grow SA’s economy by passing a pro-growth budget, everyone will be worse off and it is the poorest who will suffer first. If we increase taxes of any kind now, everyone will suffer and the poor will suffer first. 

“If we borrow more, the economy will slow down, everyone will suffer and the poor will suffer first. We cannot allow this. Instead of putting a further burden on South Africans, including the poor, by taxing them even more, we need to find other ways of finding the money to fund our schools and hospitals and it starts by stopping the culture of wasting money.” 

EFF MP Omphile Maotwe told reporters that by allowing their MPs to propose amendments to the fiscal framework and revenue proposals, the ANC admitted it was also against the VAT hike. She said the ANC’s attempts at accepting the fiscal framework and revenue proposals with amendments contradicted the Money Bills and Related Matters Act.

“It’s a confirmation that even in the committee they were amending the fiscal framework and revenue proposals. So, their own admission says we are right to be in court because what the act says is there are two things you can do with the fiscal framework and revenue proposals. You amend or you accept. You can’t accept and amend.” 

She stressed the importance of the legal challenge, saying the court was now the only thing that stood in the way of a VAT hike coming into effect next week on Thursday. 

“As things stand now, the minister has every legal right to increase VAT. VAT is going up on May 1 unless the court reverses the decision of the Assembly and National Council of Provinces. The minute you accepted that report ... that report it was procedurally unfair, it was illegal, and therefore it should be set aside.”

If the court ruled in the finance minister’s favour, the ANC still faced a stiff challenge in getting the Appropriations Bill passed in parliament. 

If the court rules in the DA and EFF’s favour, the minister will be given two days to reply and the budget’s contents will have to be considered by the relevant committees.

According to papers filed by Godongwana, the VAT hike was the only sustainable revenue proposal for the fiscus, which had no room for further borrowing or detrimental spending cuts.

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