DA continues court challenge against VAT increase despite settlement offer

The Democratic Alliance will continue with its application to have the power given to Finance Minister Enoch Godongwana to decide on VAT without ratification of Parliament declared unconstitutional.
Image: Armand Hough / Independent Newspapers
DA Federal Council chairperson, Helen Zille, said on Thursday her party will proceed with its legal challenge regarding the constitutional validity of Finance Minister Enoch Godongwana's powers to raise VAT despite the latter's out of court settlement offer.
Speaking to the media in the morning, Zille said the Part B application would move forward, regardless of any out-of-court settlement discussion with Godongwana.
She said the power to raise tax was conferred to the Parliament, not the minister.
'Only Parliament can raise taxes. It is a power that can't be delegated to a minister. We will continue with Part B of our application,' she said.
Zille also said the DA has yet to receive formal settlement out of court settlement offer from Godongwana.
'The minute we see it, we will know what he is asking for and what we will not do is not to withdraw Part B of our application. It is important get to the order of the court that only Parliament can raise taxes,' she told the journalists.
Godongwana announced his decision to introduce the Rates and Monetary Amounts and the Amendment of Revenue Laws Bill, which proposes to maintain the Value-Added rate at 15 per cent from 1 May 2025, instead of the proposed increase to VAT announcement in the Budget in March, two days after the court heard an application by the DA and EFF.
Godongwana said the decision to forego the increase followed extensive consultations with political parties, and careful consideration of the recommendations of the parliamentary committees.
'By not increasing VAT, estimated revenue will fall short by around R75 billion over the medium term. As a result, the Minister of Finance has written to the Speaker of the National Assembly to indicate that he is withdrawing the Appropriation Bill and the Division of Revenue Bill, in order to propose expenditure adjustments to cover this shortfall in revenue.'
National Treasury said Parliament will be requested to adjust expenditure in a manner that ensures that the loss of revenue does not harm South Africa's fiscal sustainability.
'The decision not to increase VAT means that the measures to cushion lower income households against the potential negative impact of the rate increase now need to be withdrawn and other expenditure decisions revisited.
'To offset the unavoidable expenditure adjustments, any additional revenue collected by SARS may be considered for this purpose going forward.'
The National Treasury said it will consider the proposals put forward as potential amendments in upcoming budgets as mechanisms to increase the resources available.
While the national Treasury's statement was mum on the proposed out of court settlement with the DA, Zille said it came as a surprise very late last night on Wednesday their lawyers informed her they had been approved for a settlement offer by Godongwana's lawyers.
She said it was less than a week Godongwana stated in the answering affidavit that the would increase the VAT on May 1.
'What happened between last Thursday and yesterday was DA challenge heard in court on Tuesday… I have no doubt his legal team went to him yesterday to say it looks inevitable the VAT increase could well be set aside by the court,' she said.
Zille also said her party would check for necessary spending reviews.
'There is still quite a battle to run from this point onwards.'
She said they expected Godongwana to make a formal out of court settlement offer and they will respond through their lawyers.
Zille also noted that there was no precedence to their court case.
'We believe a court can set aside Parliament's acceptance of fiscal framework if it was unlawful and irrational,' she said, adding that they did not know which path was to be followed.
"There were two main respondents in our case. Number one was the minister and obviously the National Treasury and two was Parliament,' she said.
'We have to seek a settlement agreement with both before we can say we have beaten this VAT increase. So it's important for us to say that while victory is a nose length away, we still have to cross the finishing line," Zille said.
Asked about the DA's stay in the Government of National Unity, Zille said it was not her position to say under what circumstances the GNU should continue.
'I can't categorically answer now. A lot will depend on what happens today.'
Zille also said the ANC, which held its press conference with smaller parties that voted for the fiscal framework, cancelled their meeting that was scheduled for 11am.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

The Citizen

11 hours ago

• The Citizen

Floyd Shivambu not on list of MK party members going to parliament

After Shivambu was removed as secretary-general, the MK party claimed he was being redeployed to Parliament. Former MK party secretary-general Floyd Shivambu briefs the media at Mhulu Luxury Boutique Hotel on 19 June 2025 in Midrand. Picture: Gallo Images/Fani Mahuntsi The MK party on Saturday released its list of new members to be sworn in at Parliament, and Floyd Shivambu is not among them. Shivambu was recently axed as the party's secretary-general after he visited fugitive pastor Shepherd Bushiri in Malawi. Floyd Shivambu will not be sworn in as MP His name is not on the list despite earlier claims by the party that he would be redeployed to Parliament. JUST IN: The #MK Party has released its list for new MPs to be sworn in. Former SG of the party Floyd Shivambu is not on the list, despite the party having previously said Shivambu will be heading to parliament. Khanyisile Litchfield will be heading to Parliament for MK #eNCA — Heidi Giokos (@HeidiGiokos) June 21, 2025 The nine names on the list are: Lungisani Shangase, Jefrey Mtolo, Zibuse Cele, Siphetho Mkhize, Philisande Mkhize, Kaiser Motaung, Noma Buthelezi, Ntandoyenkosi Shezi and Khanyisile Litchfield-Tshabalala. The new MK party MPs are set to be sworn in on Wednesday. They will be filling vacant seats. ALSO READ: MK party accuses 'political outcast' Jabulani Khumalo of making false claims Shivambu 'will not quit MK party' Despite being sidelined, Shivambu this week said he will not quit the party. He, however, revealed that he is consulting with traditional and religious leaders about starting a new political formation. He also claimed that his removal was due to 'fake intelligence' that he was plotting to unseat Jacob Zuma as leader of the MK party. Shivambu also claimed there are 'political scoundrels' who siphon funds from the MK party. He said R7 million is being withdrawn from the party coffers every month. Seemingly taking a shot at Zuma and his children, the former EFF leader also said a political party should never be a 'family project'. 'A political party should never be an individual project… It must never be a family project. A political party should not be a tribal or ethnic project.' NOW READ: Does South Africa need a political party led by Floyd Shivambu?

IOL News

15 hours ago

• IOL News

Exploring the 2023/24 funding of South African political parties

Political parties represented in Parliament and the nine provincial legislatures shared more than R3.24 billion in 2023/24, according to lobby group My Vote Counts. Image: Bongani Shilubane / Independent Newspapers Political parties represented in Parliament shared over R3.24 billion in 2023/24 through private funding, allocation from Parliament and provincial legislatures, and the Electoral Commission of South Africa (IEC). According to lobby group My Vote Counts (MVC), the ANC received the lion's share of nearly R1.72bn and the DA was allocated about R655 million, while the EFF got over R309m. The list does not include uMkhonto weSizwe Party as it only contested elections for the first time in May last year following its establishment in December 2023. In the 2023/24 financial year, the IEC received disclosure reports from Parliament and all nine provincial legislatures in respect of the funding of represented political parties. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ An amount of about R1.56bn from Parliament and nine provincial legislatures was allocated to 15 represented political parties. The ANC's R1.72bn allocation includes R905m from Parliament and provincial legislatures, R527m through private funding, and R286m from the IEC-administered represented political parties and multi-party democracy funds, according to MVC. The DA received R311m from Parliament and provincial legislatures, R213m through private funding, and R121m from the IEC. The EFF's R309m includes R180m from Parliament and provincial legislatures, R79m from the commission, and R51m in private funding. A few months ago, the National Assembly's Portfolio Committee on Home Affairs voted to double two crucial limits in the Political Funding Act. This means the disclosure threshold and donations cap could be raised from R100,000 to R200,000 and R15m to R30m, respectively. The MVC was among several organisations that objected during the public participation process, after which the committee unanimously voted to adopt a report and resolution recommending the increase. 'In passing the resolution, the committee chose to disregard both relevant empirical considerations and the public interest, in favour of political expediency,' the group accused the committee. It noted that funding through the represented political parties' fund (RPPF), as revealed in Finance Minister Enoch Godongwana's Budget, barely increases over the next few financial years. 'This belies the passion with which parties spoke about the need for more funding during the parliamentary processes... If parties are indeed so desperate for additional funding, why did they accept a Budget that offers them a real-term reduction in public funding?' it asked. The amount allocated to represented parties through the RPPF in 2022/23 was R342m, and R322m is the adjusted appropriation for 2024/25. The R850m for 2023/24 was an anomaly as an additional amount was distributed to parties to allow them to prepare for the 2024 national and provincial elections.

eNCA

20 hours ago

• eNCA

Language row erupts during Kouga council meeting

JEFFREYS BAY - The Kouga Municipality in the Eastern Cape is embroiled in a language controversy. Opposition parties allege that isiXhosa-speaking councillors are being silenced for speaking their mother tongue during council meetings. The Speaker, who reportedly does not speak isiXhosa, is accused of insisting that councillors use only English or Afrikaans, threatening action for non-compliance. The Speaker maintains, however, that English has always been the primary language of council proceedings. The caucus leader for the DA in the Kouga Municipality has dismissed the language bias claims. Bornman Hattingh, who is also the mayor, says they've always used English and Afrikaans.