High Court issues draft order suspending VAT increase
The EFF had argued that the adoption of the fiscal framework by both houses was central in the unlawful process to ultimately adopt the fiscal framework which contained the VAT increase.
Picture: Pixabay.com
CAPE TOWN - National Treasury has been dealt another blow in the value-added tax (VAT) increase saga after the Western Cape High Court ordered that parliament’s adoption of the fiscal framework and VAT increase be set aside.
The court made the order on Sunday in the Democratic Alliance (DA) and Economic Freedom Fighters’s(EFF) court challenge to have the VAT rate adjustment set aside, as well as the resolutions of the National Assembly and national council of provinces to accept the report of the standing committee and select committee on finance.
The EFF had argued that the adoption of the fiscal framework by both houses was central in the unlawful process to ultimately adopt the fiscal framework which contained the VAT increase.
The High Court’s decision comes only after the Minister of Finance’s decision to withdraw the VAT increase and also offer the DA an out-of-court settlement in its application.
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But the ruling is seen as vindication by the DA and the EFF, an intervening party in the application.
The EFF has always argued that the fiscal framework and revenue proposals were adopted irregularly which should have nullified the VAT increase.
The court order states that the minister of finance’s announcement on the 12th of March of a 0.5 percentage point VAT rate adjustment is “suspended pending the passing of the legislation regulating the VAT rate or the final determination of part b of the DA’s case, or whichever comes first.
Part B of the DA’s application is to have section 7(4) of the Value Added Tax Act declared unconstitutional because the party argues it gives the minister too much power over the VAT rate and takes the power away from parliament.
The court has also ordered the finance minister to pay half of the DA’s costs and has ordered the speaker of the national assembly and NCOP chairperson to also pay 50% of the EFF’s costs which is an intervening party in the application.