Godongwana’s new Bill aims to abolish VAT hike before May deadline

Finance Minister Enoch Godongwana has officially introduced a new Bill in Parliament to replace the proposed increase in Value Added Tax (VAT) ahead of its scheduled implementation date of May 1.

This emerged in the Parliament’s communiqué, known as Announcements, Tablings and Committee Reports (ATC) published on Thursday night.

The tabling of the new Rates and Monetary Amounts and Amendment of Revenue Laws Bill comes after Godongwana announced earlier on Thursday his decision to scrap the VAT increase amid the court case instituted by the DA and EFF in the Western Cape High Court and negotiations involving the ANC and other small parties.

The ATC notice said the new Bill has been referred to the Standing Committee on Finance and the Select Committee on Finance for information.

It also said the Bill will be referred to the Joint Tagging Mechanism (JTM) for classification.

“The Bill may only be classified after the expiry of at least seven parliamentary working days since introduction,” reads the ATC.

The introduction of the new Bill scrapping the 0.5% VAT increase was done simultaneously with the withdrawal of the Appropriation Bill and the Division of Revenue Bill.

”The Bill seeks to pre-empt the increase of the rate in terms of Section 7 of the Value-Added Tax Act, 1991, announced by the Minister of Finance in the national annual Budget of 2025,” reads the content of the new Bill.

In a twist of events, the EFF has written to National Assembly Speaker Thoko Didiza, raising constitutional and parliamentary implications from Godongwana’s withdrawal of Budget-related bills.

Chief whip Nontando Nolutshungu said despite their pending court challenge, they remained committed to engaging through parliamentary structures to resolve the matter.

Nolutshungu reminded Didiza that the Red Berets had written to her, cautioning that the report of the Standing Committee on Finance had been adopted unprocedurally and should have been withdrawn.

“Instead of constructively addressing these concerns, you dismissed them outright and allowed the matter to proceed despite knowing the legal and procedural implications,” she said.

Nolutshungu said the EFF was now seeking clarification on whether Godongwana intended to also withdraw the 2025 Fiscal Framework and Revenue Proposals that were adopted by the National Assembly.

“If so, we request that you advise the National Assembly on the appropriate constitutional and procedural mechanisms that will be used to reverse a resolution of Parliament, given that such resolutions have legal standing and implications,” wrote Nolutshungu.

She urged Didiza to convene a meeting of all leaders of political parties represented in Parliament to deliberate Godongwana’s decision to withdraw critical Budget instruments and the path towards legal, economic, and institutional certainty.

The DA has indicated that despite Godongwana wishing to enter into an out-of-court-settlement, the battle was not yet over.

Federal council chairperson Helen Zille told the media on Thursday that they were expecting a formal settlement proposal from Godongwana’s lawyers.

She had indicated that there was still the issue of the acceptance of the fiscal framework by the portfolio committee.

“There is no precedent that we know of how that can be set aside.”

Zille said one option was for a court to set aside Parliament’s acceptance of the fiscal framework if it was unlawful and irrational, and another was for Didiza to reconvene Parliament to review and rescind that decision.

“We will continue negotiating a settlement through our lawyers with the minister’s legal team and hopefully with Parliament’s legal team as well.”

mayibongwe.maqhina@inl.co.za