Court battle under way over VAT hike: DA's stance on fiscal policy

In a move to challenge what it describes as an unjust and harmful tax policy, the Democratic Alliance (DA) is on Tuesday seeking the court to interdict the proposed 0.5% increase in Value Added Tax (VAT), effective May 1, 2025.

The party argued that the hike would impose additional hardship on ordinary South Africans, particularly the poor and vulnerable, and that the government’s decision was made without adequate consultation or consideration of its broader economic impact.

This was after the Parliament Finance Committee approved the ANC's proposal for the 2025/26 VAT hike with the help of IFP, ActionSA, BOSA, UDM, and other smaller parties against fierce opposition from the DA, EFF, and the MK Party.

Speaking outside the court on Tuesday, DA spokesperson on Finance, Dr Mark Burke MP, delivered a passionate statement, emphasising the party’s opposition to what he called a "tone-deaf" budget. 

“We are here today to say that we oppose that road. We oppose this anti-growth, anti-jobs, and anti-poor VAT-based budget.”

Burke’s remarks highlighted the detrimental effects the increase could have: pushing more South Africans into poverty, reducing household disposable income, and stifling economic recovery.

In his statement, Burke criticised the government’s approach, stating: "We oppose a debilitating and bulldozing budget that will lead to further poverty by taking money from people who can’t afford it and giving it to people who don’t know how to use it."

He also warned that the VAT hike would deepen youth despair, depress property values, and make daily transportation more expensive.

He further clarified the DA’s position on fiscal policy: "We are not opposed to a workable budget. We won’t oppose a budget for its sake and under all circumstances. We would support a budget focused on infrastructure investment and no new bailouts."

However, Burke lamented that the ANC government had "steamrolled" a "tone-deaf" budget against the party’s advice and collaborative input.

He emphasised that legal action was a last resort but necessary to protect ordinary citizens from policies that threatened their livelihoods.

The Broader Context

The DA’s legal challenge comes amid rising public concern about the government’s fiscal policies. The party’s decision to go to court reflects a broader frustration with the ANC’s approach, which many see as out of touch with the economic realities faced by South Africans.

Burke concluded his remarks with a poetic call for listening and understanding:

*"How many ears must one party have

Before they can hear people cry?

How many times can you turn your head

Pretending that you don’t see?"

As the court proceedings unfold, all eyes will be on whether justice aligns with the DA’s concerns and whether the government will reconsider its approach to the VAT hike. 

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