Constitutional showdown: DA launches urgent court application against VAT hike

THE DA on Thursday filed an urgent application in the Western Cape High Court to interdict the VAT increase and also set aside the parliamentary process that adopted the Fiscal Framework Policy and Revenue Proposals.

This comes a day after the fiscal framework and revenue proposals were passed in Parliament on Wednesday after National Assembly Speaker Thoko Didiza rejected calls to postpone the proceedings and refer the report back to the Standing Committee on Finance.

In court papers, DA federal council chairperson Helen Zille asked the court to set aside the adoption of the fiscal framework and send the report back to the finance committees.

Zille also asked the court to interdict VAT increase on May 1 pending the final determination of the Part B application to challenge the legislative provision that granted Finance Minister Enoch Godongwana power to amend the VAT rate.

She said the resolutions to adopt the fiscal framework reports were fatally irregular and unlawful.

The committees did not vote on the wording of the final report, and though the report contained a statement accepting the fiscal framework, it can hardly be described as “clear” since the report “recommends” that Godongwana “facilitates the receipt of substitute revenue proposals” to replace VAT increase.

“This relief is urgent. If the Budget process continues, it will be tainted by this illegality. South Africa’s economy cannot afford uncertainties about whether its Budget was adopted lawfully or not. The matter needs to be resolved swiftly so that a lawful process may be undertaken,” she said in court papers.

Addressing the media, Zille said her party was absolutely determined that it would succeed in its plan to stop the VAT increase on May 1 as announced by Godongwana.

“All of these people who are under the mistaken illusion that ActionSA has stopped VAT are just as that, deluded. In fact, the fiscal framework passed by Parliament on Wednesday included VAT increase,” she said.

“The notice put out by Parliament says VAT increase will come on May 1. If ActionSA still believes they stopped it, they live in cuckoo land,” DA’s federal chairperson said.

Zille said her party had tabled a package of economic reforms that would have enabled the economy to grow, create jobs, and enable the government to increase a tax package by having far more people employed.

She maintained that the DA was not in the Government of National Unity (GNU) for “blue lights, cars, ministerial homes of status”.

“We are in that GNU for one sole purpose, to get the South African economy to grow at the rate it needs to grow in order to absorb more people into productive employment.”

 Zille was convinced that they had a very strong and solid court case.

“These are crucial papers that are really to change how decisions are taken in Parliament and change the decision to increase VAT.”

She told the media that the federal executive would soon meet to consider every aspect of the case, strategy, and tactics.

“We know every decision we take will have profound implications for South Africans and our economy. We are not rushing anything so we are to consider all options, look at all the consequences, and try to predict the unintended consequences and make rational decisions on the basis of those at the right time.”

Zille defended their court action after losing in the parliamentary process, saying Parliament has to follow the rules, and law and abide by the Constitution.

“If they don’t, our remedy is to go to court. We believe in the rule of law, constitutionalism and the government has to be first to abide by the Constitution and law.”

She insisted that Godongwana violated the Constitution by announcing the VAT increase whether or not it went through Parliament.

“That has to be changed. We talk about the rule of law and unless laws are passed procedurally and committees conduct themselves procedurally, the only remedy is to go to court.”

DA spokesperson on finance Mark Burke noted that the passing of the Budget entailed the passing of the fiscal framework, Division of Revenue Bill, Appropriation Bill, and tax laws.

“We are to monitor these bills to see procedure and how they are passed,” Burke said.

While the DA took to court, the ANC said the adoption of the fiscal framework was not about political point-scoring but about ensuring a Budget that prioritised the needs of the poor and working class, protecting social wages and sustaining economic recovery.

“We note that several parties engaged with the process in good faith, placing the country above narrow interests. The ANC acknowledges these contributions and emphasises that our collective responsibility is to protect South Africa’s democratic and developmental gains,” spokesperson Mahlengi Bhengu-Motsiri said.

Meanwhile, ActionSA parliamentary leader Athol Trollip said the DA was within its right to pursue legal action.

“We encourage them in fact to do that,” Trollip told journalists in Parliament.

 He also said they remained committed to shielding ordinary South Africans from tax hikes.

He said the budgeting process still involved multiple bills that will be voted on over the coming months.

“Our support remains conditional on the strict fulfilment of the agreement to scrap the VAT increase and income tax bracket creep through alternative proposals — several of which we have already outlined.”

mayibongwe.maqhina@inl.co.za