The Congress of South African Trade Unions (COSATU) has cautioned that challenging South Africa’s value-added tax (VAT) laws in court could destabilize the entire taxation system.
Minister Enoch Godongwana faces legal opposition from the Democratic Alliance (DA) and the Economic Freedom Fighters (EFF), who have approached the Western Cape High Court seeking to overturn his decision to increase VAT by 0.5 percentage points announced on 12 March. The increase is scheduled to take effect on 1 May.
The DA has further escalated its action, requesting the court to declare a specific section of the VAT Act unconstitutional.
Matthew Parks, COSATU’s parliamentary coordinator, has warned that the legal challenge is risky. “The legal case regarding VAT law is problematic because it risks disrupting the stability of the entire system,” he said.
However, Parks also criticized Godongwana for not adequately exploring alternative revenue solutions to avoid the VAT increase, highlighting that Parliament explicitly instructed the finance committees to identify alternatives to increasing VAT and personal income taxes.
Godongwana continues to defend the VAT hike in court.
