Buoyed by the recent high court ruling that only parliament, not the minister of finance, can change the VAT rate, the EFF has upped the ante, seeking a similar ruling on the National Treasury’s powers to increase the fuel levy.
The South African Revenue Service collects almost R50bn a year in fuel levies.
The move by the EFF, which is outside the government of national unity, has far-reaching implications for the national treasury’s revenue-collection levers, which until the VAT challenge were left unbothered for decades.
Finance minister Enoch Godongwana was taken to court by the DA, challenging the VAT Act and arguing it gave the finance minister the power to change the VAT rate for an entire year without parliament’s approval.
A full bench of the Western Cape High Court this month found the section that empowers the minister to alter the VAT rate constitutes an impermissible delegation of legislative power to the executive.
The order affirming that only parliament has the authority to impose VAT tax hikes still needs confirmation by the Constitutional Court.
The EFF has now latched on to the judgment to bolster its case challenging the minister’s power to implement increases of fuel levies and carbon fuel levies without parliamentary approval through money bills.
EFF MP Omphile Maotwe, in supplementary court papers lodged after the VAT judgment, argues that the constitutional defect in the VAT case is the same as that alleged in the fuel levy increase dispute.
Maotwe argues that provisions of the Customs and Excise Act delegates to the executive the power to set the rate of a national tax, with immediate effect, without prior parliamentary approval.
“At [the] moment the fuel levy rate changes, parliament has had no opportunity to approve or reject the increase,” said Maotwe.
“A mechanism that permits imposition first and parliamentary consideration second does not satisfy the constitutional requirement that the taxing power be exercised by parliament, not by the executive.”
University of Johannesburg macroeconomic and fiscal analyst Prof Dumisani Jantjies said the effect of stripping the National Treasury of the power to amend the VAT rate makes other indirect taxes that have been adjusted through executive notices governed by the Customs and Excise Act legally vulnerable.
This includes fuel levies and alcohol and tobacco taxes.
“The VAT judgment makes other taxes very vulnerable. The effect is that parliament is the only one that approves taxes. If that judgment stays, taxes like your fuel levy will be vulnerable to legal challenges similar to the one of the VAT,” he said.
The case of the EFF is mainly about fuel levy changes. It argues that the effect of fuel increases has the legal effect of a taxing power that the constitution affords to parliament.
Prospects of curtailing the National Treasury’s long-enjoyed powers to change taxes will largely depend on the legal cases put before court, Jantjies said.
The VAT judgment makes other taxes very vulnerable. The effect is that parliament is the only one that approves taxes. If that judgment stays, taxes like your fuel levy will be vulnerable to legal challenges similar to the one of the VAT
— Prof Dumisani Jantjies
He said the Treasury has used the taxes to boost revenue without constitutional challenges in court questioning whether the fiscal decisions are in line with the constitution.
“Fiscal policy has become more politically charged than ever before. In any case, revenue has always been politically contested. The VAT judgment heightens that a lot.”
The effect of the VAT judgment will also cause a delay in the National Treasury’s revenue collection methods of certain taxes, as parliament’s approval is required.
“The reason there was advantages for the minister of finance to implement tax overnight was really to avoid tax avoidance. It allowed them to generate revenue quickly. It allowed them to bypass the political fights. It allowed them to predict the revenue quite well.”
The change in law will require mature political decisions under the government of national unity.
Revenue forecasting
“There is going to be a lot of delays. It brings more volatility in revenue forecasting because they are not sure whether the revenue will come in.”
Godongwana in this year’s budget speech announced the general fuel levy will increase by 9c per litre for petrol and 8c/l for diesel.
The minister has opposed the EFF’s application.
The EFF’s bid for an urgent interdict failed last year when the court struck the case from the roll in June 2025.
The loss set into motion Godongwana’s plans to raise revenue of R3.5bn in implementing the hike. Godongwana last year increased the general fuel levy by 16 c/l for petrol and by 15 c/l for diesel.
The review application will be heard on May 20 before the new fuel levy increase takes effect.
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