JOHANNESBURG -JOHANNESBURG - The ongoing fight by the DA and EFF against the VAT increase will cause uncertainty among business, households and investors.
This is according to Kevin Lings, Chief Economist, at Stanlib who weighed in on the legal battle over the 0.5 percentage point increase expected to implemented in May.
READ | EFF accuses finance minister of deception over VAT hike
The DA and the EFF have banded together and headed to court to fight the hike.
This battle comes after Parliament passed the 2025 Budget presented by Finance Minister Enoch Godongwana.
The DA argues that both the National Assembly and National Council of Provinces (NCOP) adopted the fiscal framework without proper process while EFF lawyer, Tembeka Ngcukaitobi has accused the finance minister of deception in getting the budget passed.
Despite the court challenge, Godongwana says the VAT increase is already a done deal.
According to Lings businesses will feel the effects of this battle this as many have already made plans to implement the 0.5% increase.
At this stage most are assuming that the VAT Increase is going ahead and have already put that in their system
But even if the DA and EFF succeed in their court bid, this will not resolve the matter.
“There is no upside to this. Even if the court case is successful and the 0.5 percentage point does not go ahead the problem has not been resolved. The government would have a revenue shortfall and would not know how it would be resolved, leading to more uncertainty,” Lings explains.
Meanwhile VAT Specialist from Webber Wentzel, Des Kruger says the legal framework does not determine whether the finance minister could erase the VAT or not.
The legislation is clear once announcement for increase has been made it is effective for 12 months.