The Western Cape High Court has declared section 7(4) of the Value-Added Tax Act unconstitutional, ruling that the finance minister cannot raise or lower VAT through a budget announcement without Parliament's prior approval. The judgment, handed down on 5 March 2026 by Judge Matthew Francis, with Judges Cloete and Lekhuleni concurring, found that the provision amounts to an impermissible handover of Parliament's taxing power to the executive.

The case grew out of the political fallout from the 2025 Budget, in which Finance Minister Enoch Godongwana announced a VAT increase from 15% to 15.5% from May 2025, with a further rise to 16% planned for April 2026. The increases were withdrawn within weeks following heavy political pushback, but the DA pressed ahead with a separate constitutional challenge to the law that had allowed the minister to act in the first place.

The ruling doesn't take immediate effect. It has been referred to the Constitutional Court for confirmation, and Parliament has 24 months to fix the provision. Section 7(4) remains in force until then. Both the DA and EFF welcomed the judgment as vindication of their long-standing objection to the mechanism.

What the Court Actually Said

The judgment itself is careful to frame the ruling as narrow rather than sweeping. The Court summarised that Section 7(4) authorised the executive to determine the rate of a tax that applies across the entire economy, but that delegated power was not accompanied by express statutory criteria governing the magnitude of any alteration, nor did it require Parliament's ratification within a defined short period after the rate change took effect. As a result, there were no sufficiently defined statutory limits or mechanisms of prompt legislative control to maintain the balance between executive agility and parliamentary supremacy — and on that basis, section 7(4) was declared unconstitutional and invalid as an impermissible delegation of legislative power to the executive.

Details

The court explained that its conclusion did not rest on a blanket rule against ever delegating rate-setting power, nor on the idea that the executive should have no role in responding quickly to fiscal pressures. Instead, the defect was specifically that section 7(4), as written, gave the minister an essentially open-ended power — with no statutory cap on how big a rate change could be, and no requirement that Parliament approve the change before it started affecting taxpayers. The provision in its current form simply fell outside what the Constitution allows when it comes to balancing executive agility against Parliament's ultimate authority over taxation.

The judges were also careful not to dismiss the government's practical concerns. They acknowledged that responsive fiscal management is a legitimate goal, that VAT cannot realistically be adjusted retroactively once collected, and that the ordinary legislative process for passing a money bill can take six to twelve months — a real constraint on how quickly Parliament can act on its own. But the court found that this didn't justify the current design, pointing out that the government itself had managed to respond to the 2025 revenue shortfall through alternative measures once the VAT increase was withdrawn, which suggested the section 7(4) mechanism was convenient but not indispensable.