Neelam Rahim | neelam@radioislam.co.za
3-minute read
25 April 2025 | 16:16 CAT

A celebrates the Finance Minister’s U-turn on the VAT hike following a successful legal challenge. Photo: YouTube

The Democratic Alliance (DA) has claimed a major victory following Finance Minister Enoch Godongwana’s decision to abandon the planned 0.5 percentage point increase in Value-Added Tax (VAT), initially scheduled to come into effect on May 1st—Workers’ Day.

This reversal, according to the DA, is a direct result of the party’s legal challenge brought before the courts earlier in the week. DA spokesperson Willie Auckamp told Radio Islam International, “This announcement follows directly after the lawyers acting for the Minister approached us to propose an out-of-court settlement.”

The legal battle, which played out in court on Tuesday, saw justices questioning the legitimacy of the VAT increase, signaling the DA’s high likelihood of success. “It was very clear that we were going to win,” said Auckamp. “The Minister’s legal team knew it too, and that’s why they reached out.”

While no formal settlement has been signed yet, the DA insists on recovering legal costs and remains committed to challenging Section 7.4 of the VAT Act, which currently allows the Finance Minister to increase taxes without broader government consultation. Auckamp explained, “We believe it is unconstitutional for one person in the executive to raise taxes unilaterally.”

Despite the settlement discussions, the court is expected to issue a judgment on April 29. Should no agreement be reached, the legal process will continue.

Politically, the VAT saga has further strained relations within the Government of National Unity (GNU). While the DA reiterates its commitment to the GNU, it has criticised the ANC for not upholding the coalition’s founding principles. “The ANC is a 39% party now. They must learn to share power,” said Auckamp. “We cannot be rubber stamps.”

The DA emphasised that it had offered alternatives to the VAT increase, all of which were dismissed by the ruling party. “Had they adopted our amendment to the fiscal framework on April 1st, this crisis could have been avoided,” said Auckamp.

As pressure mounts on the ANC, the broader implications of this VAT climbdown may set the tone for the coalition’s future.

Listen to the full interview on The Daily Round-Up with Moulana Junaid Kharsany and the DA spokesperson Willie Auckamp here.