Finance Minister Enoch Godongwana has launched a scathing response to the attempt by the Democratic Alliance and the Economic Freedom Fighters to block the 0.5 percentage point VAT hike due to take effect on 1 May.
In a sharply worded 51-page affidavit made public on Thursday, Godongwana (pictured) accused both parties of weaponising the courts to settle political scores, warning the High Court in Cape Town not to be drawn into what he described as a political dispute masked as a constitutional matter.
“At its core, [this] is a political disagreement dressed in the language of constitutional litigation,” he wrote.
Godongwana is the first respondent in the DA’s main application and the second respondent in the EFF’s intervention. His affidavit forms part of the government’s official response to the two parties’ legal challenge against the adoption of the 2025 Fiscal Framework by Parliament and their bid to halt the VAT increase.
Although National Treasury and Finance Ministry have refrained from public comment while the matter is before the courts, Godongwana’s affidavit pulls no punches.
He argues that the DA’s urgent application is less about legal principle and more about political posturing.
“It is plain that the DA’s application has arisen, not because of any urgent constitutional principle, but because it did not succeed in advancing its position within government,” he stated. “As a member of the Government of National Unity, the DA, having failed to secure its preferred outcome, now seeks to reframe a political disagreement as a constitutional crisis. This is not the proper function of urgent judicial intervention.”
The DA filed its application on 3 April, followed by the EFF five days later. Both parties are challenging the process by which Parliament adopted the Fiscal Framework, calling it “fundamentally flawed” and unconstitutional. They also want the VAT hike suspended.
Led by federal chairperson Helen Zille, the DA’s legal action names Godongwana, South African Revenue Service Commissioner Edward Kieswetter, National Assembly Speaker Thoko Didiza, and National Council of Provinces chairperson Refilwe Mtsweni-Tsipane as respondents. The matter is set to be heard on 22 April.
As set out in a Daily Maverick report, the DA’s application has two parts: Part A seeks interim relief to suspend the VAT increase and return the fiscal framework to Parliament’s finance committees for reconsideration. It also seeks to prohibit SARS from collecting the higher VAT rate. Part B challenges the constitutionality of section 7(4) of the VAT Act, the provision that empowers the finance minister to make temporary VAT adjustments during the budget process.
Godongwana defended the legality of the VAT announcement, made during his Budget speech on 12 March, and emphasised that the contested section 7(4) has been part of tax legislation since 2017 – with no prior constitutional objection from the DA. In fact, he noted, the DA-led Western Cape voted in favour of the 2017 amendment that introduced the provision.
He also pointed to the DA’s ability to raise its concerns through formal parliamentary mechanisms rather than resorting to the courts.
“It can seek to amend or oppose the relevant Money Bills, persuade other parties, and act within the bounds of parliamentary procedure,” he said. “The courtroom should not become the arena in which political differences within the executive or legislature are to be resolved. And this should certainly not happen on an urgent basis and in a manner that risks severely disrupting government operations on important matters such as the fiscus.”
Godongwana slams DA’s VAT court bid as political flip-flop
Godongwana further rejected the DA’s constitutional challenge to section 7(4) of the VAT Act, calling its current opposition a contradiction of its own previous conduct.
In his affidavit, Godongwana reminded the court that the VAT increase – from 15% to 15.5%, effective 1 May – was lawfully announced during his Budget speech on 12 March. This power, he said, flows directly from section 7(4), a long-standing provision in the VAT Act allowing the minister to implement a temporary VAT rate adjustment during the national Budget.
“Even if one assumes the subsequent adoption of the fiscal framework was flawed (a contention I dispute), that is unrelated to the lawfulness of my earlier announcement under section 7(4) of the VAT Act. The announcement continues to exist and has legal effect,” he stated.
According to Godongwana, section 7(4) is designed to equip the state to act swiftly and decisively in moments of fiscal urgency.
“A short-term VAT rate adjustment stabilises revenue streams, allowing the government to fund essential services, like healthcare and education, and uphold debt obligations. Section 7(4) thus mitigates the risk of budget shortfall that might severely impact the public,” he said.
He warned that the alternative – requiring a full legislative process every time a VAT change is needed – would cripple the state’s ability to respond quickly to pressing financial needs.
“Without section 7(4), any change to the VAT rate would require a separate Money Bill. This would require a lengthy procedure involving committees, public participation, and multiple readings. Although that process is necessary and appropriate for major or lasting tax reforms, this process is ill-suited to meet urgent fiscal demands requiring immediate intervention.”
Although the DA claims the provision is unconstitutional, Godongwana noted that the party did not oppose its inclusion in the VAT Act when it was introduced in 2017. In fact, the DA-led Western Cape voted in favour of the amendment in the NCOP.
“While I understand that the DA now considers section 7(4) unconstitutional, I do not believe that the DA will seriously contend that it is undesirable to have a measure like section 7(4) of the VAT Act on the statute books,” he said. “This underscores that section 7(4) has long been regarded, including by the DA itself, as a sensible and reasonable fiscal tool.”
Godongwana said he recognises that tax increases are politically unpalatable but argued that this particular increase is both necessary and likely to gain parliamentary support once the related amendment to section 7(1) is tabled.
He said the DA had indicated openness to the VAT hike before it was formally announced – a detail he sees as undermining its legal argument.
“Prior to me making the announcement, discussions were held with political parties forming part of the Government of National Unity on the possibility of a VAT increase. During those discussions, the DA, currently the second-largest political party in the National Assembly, indicated that it was open to a 0.5-percentage-point increase in the VAT rate, subject to certain conditions, not relevant to this application, being met. This demonstrates that the DA is not, in principle, opposed to a VAT increase.”
Godongwana dismissed the DA’s claims of urgency and public harm as politically motivated and lacking substance, stating that the VAT provision the party is now challenging has been part of South Africa’s tax law since 2017 – and the DA raised no constitutional concerns for nearly a decade.
“Only after a political disagreement about the contents of the 2025 Budget has the DA rushed to court, seeking urgent and far-reaching relief. This sequence of events undermines the urgency it claims and strongly suggests that the present challenge is driven by political dissatisfaction rather than genuine constitutional principle.”
Halting VAT hike risks R13.5bn shortfall
Godongwana delivered a warning about the economic consequences of halting the VAT increase, saying the move would punch a R13.5 billion hole in the Budget and could push the country towards painful cuts to public services or more expensive borrowing.
In his affidavit, he defended the increase as a difficult but necessary step to plug a widening fiscal gap that has been growing since 2008.
Godongwana laid out the grim trajectory of public finances: since 2007/08, government net loan debt has ballooned from under R500bn to nearly R3 trillion by 2020. This surge, he said, is the result of a persistent mismatch between spending and tax revenue.
Faced with a limited set of options, the minister argued that raising VAT was the least harmful choice.
“From a policy perspective, as outlined in the 2025 Budget, the alternatives [increasing personal income tax rates or increasing corporate tax rate] considered by the National Treasury in formulating the revenue proposals (including the VAT rate increases), represented potentially more detrimental outcomes in terms of economic growth and employment than the VAT proposals,” he said.
He emphasised that any delay in implementing the increase would leave the Budget unbalanced, because spending has already been locked in.
“The revenue shortfall would require higher borrowing in the short term to fund the additional expenditure that is included in the Budget. This would increase our debt-to-GDP ratio, leading to higher debt service costs that crowd out other expenditure.”
Godongwana warned that if the VAT increase is suspended, the fallout would be swift and severe. National Treasury projects the 0.5-percentage-point increase will bring in about R13.5bn in additional revenue in the 2025/26 financial year – money that has already been factored into spending plans.
“If the government is denied the ability to raise the additional revenue through the VAT rate adjustment (and section 7(4) is ultimately upheld as constitutional, which I respectfully submit is likely), the government and the public will suffer immense and unnecessary prejudice.”
He said the alternatives would be equally painful. Immediate expenditure cuts would likely target education, healthcare, housing, and social protection – areas that hit the poorest South Africans the hardest.
“Increased borrowing would further strain the fiscus, undermine investor confidence, and increase the cost of public debt,” he said.
The knock-on effects, he added, could be devastating: credit rating downgrades, disrupted service delivery, and broader economic instability – possibly followed by even harsher tax hikes down the line.
He said these risks are not hypothetical but the very harms that section 7(4) was designed to prevent by allowing swift, time-bound adjustments to secure the public finances pending Parliament’s final decision.
“The major point is this: if the rate increase is halted now, that revenue will be lost, and the State will be left without the funds needed to meet already-budgeted spending commitments.”
