The EFF says the 0.5 percentage point increase in VAT will come into effect on May 1 regardless of the 30-day window period that parliament has recommended to the National Treasury to find alternative revenue streams.
The non-binding recommendation was brought forward by ActionSA MP Alan Beesley during a meeting between parliament’s two finance committees and was a key component of the last-minute deal struck by ActionSA and the ANC to have the fiscal framework passed.
The EFF, which voted against the passing of the fiscal framework last Wednesday in parliament, seeks to join the DA’s application in the Western Cape High Court to declare the VAT hike invalid pending the finalisation of the Part B application and interdict its implementation.
Parliament can suspend the VAT increase if it passes a new Rates and Monetary Amounts Amendment Bill. This is unlikely because MPs are on a two-week constituency period and parliamentary process will not be completed by May 1.
The National Assembly endorsed the fiscal framework along with a recommendation that the Treasury find alternatives within 30 days to the one percentage point VAT increase over two years and the non-adjustment of personal income tax brackets to account for inflation, a total of R31.5bn.
According to EFF treasurer-general Omphile Maotwe, who is also a member of the National Assembly standing committee of finance, finance minister Enoch Godongwana has until May 16 to respond to the recommendation to suspend the VAT hike. This is two weeks after the VAT hike is scheduled to come into effect.
“An ironic sense of things, the ASA [ActionSA] amendment is irrational and does not achieve what it seeks to achieve. Any decision, including the 30-day window period granted to the finance minister to consider the recommendations, was taken under the Money Bills [and Related Matters] Act process of considering the fiscal framework and taking a decision in terms of section 8(4) of that act,” Maotwe said in a supporting affidavit.
The committee’s report was potentially passed unlawfully due to procedural irregularities, including a lack of required recommendations and insufficient deliberation. The changes made to the report after its adoption may have compromised its legitimacy and effectiveness, potentially violating the constitution and the money bills act, Maotwe said.
“The process by which the report was adopted is fundamentally irrational and internally contradictory. I am advised that the main constraint to the exercise of public power is the principle of legality, which requires that all public power must be procedurally and substantively irrational,” Maotwe said.
“Evident from the deliberations of the committee, it was clear that the members held a misconceived view that they could amend and accept the report. The belated styling of Beesley’s proposal as a recommendation came at the last hour of an eight-hour sitting necessitated by the difficulty of what section 8(4) [of the money bills act] provided for. The committee took it upon itself to clothe itself with the power the ‘accept and amend’.”
The EFF’s court application comes amid negotiations between the ANC and its GNU coalition partners aimed at resetting the arrangement to avoid another budget impasse.
“The electorate sent a clear message: single party rule is over and no one party gets to dictate our policy direction. SA needs an era of co-governance, built on the implementation of bold, pro-growth reforms that create jobs and restore fiscal stability. That is why the DA signed the statement of intent and entered the GNU — we wanted shared governance that prioritises delivery and economic recovery over political convenience,” DA leader John Steenhuisen said in a statement.
“The DA has been clear and consistent about our position on VAT inside government and outside government. Not once has the DA gone outside of the GNU to lobby support for our position, which is what the ANC did, defining itself outside the GNU.”
Business Day previously reported that the GNU had crafted new rules of engagement within its clearing where policy disputes would be resolved.
The ANC in parliament is holding discussions with parties that supported the fiscal framework on alternative revenue streams.
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