Xavier Radio Ug News 24 7
Prof Dumisani Jantjies
As Parliament prepares to host public hearings this Tuesday, 10 March 2026, on the 2026 Budget’s fiscal framework, a legal earthquake has fundamentally shifted the ground beneath our feet. Last Thursday, the Western Cape High Court delivered a landmark judgment declaring Section 7(4) of the Value-Added Tax (VAT) Act unconstitutional. For the ordinary South African, this isn’t just a technical legal dispute; it is a vital restoration of the constitutional promise that only your elected representatives, not a single Minister, have the power to reach into your pocket.
Understanding the ruling: The end of Executive Fiat
For decades, a specific clause in the VAT Act allowed the Minister of Finance to change the VAT rate simply by publishing a notice in the Government Gazette. This meant that after a Budget Speech, a tax hike could take effect almost immediately, long before Parliament had even debated, let alone passed, the relevant law.
The Western Cape High Court has now ruled that this is an impermissible delegation of power. In our democracy, the Constitution prescribes a strict separation of powers. The Executive (the Presidency and Cabinet) proposes policy, but the Legislature (Parliament) must dispose or approve it. By bypassing Parliament, the previous system allowed for taxation without representation, treating the public participation process as a mere formality after the fact.
What this means for you: Households and Businesses
For the average household, this ruling provides a vital shield. VAT is a regressive tax; it hits the poorest the hardest because it applies to almost everything we buy. Because VAT is collected at the till, once you pay it, it is irreversible. If a Minister hiked VAT and Parliament later decided it was a bad idea, there would be no practical way to refund those cents to millions of individual shoppers. The court recognized this irreversibility, ensuring that from now on, the debate must happen before the price at the till goes up. For businesses, this brings a new level of predictability. Sudden, notice-based consumption tax changes force companies to overhaul accounting systems and pricing structures overnight. A Legislature-First approach ensures that tax changes follow a transparent, predictable calendar, allowing the private sector to plan with greater certainty.
Impact on Government and Oversight
From a government perspective, the National Treasury can no longer rely on budget announcements as a guaranteed start date for new revenue. This creates a fiscal time-lag that requires the state to be more agile and better at long-term planning. They can no longer treat Parliament as a rubber stamp. This is where the upcoming public hearings become critical. Parliament must now transition to a developmental oversight model. We must move away from tick-box exercises and instead use these hearings to demand independent evidence on how tax proposals will affect the 3% growth target mandated by our national development plans. The ruling vindicates the long-held concern that the Money Bills Act was being undermined by a process that put the cart (implementation) before the horse (legislation).
Not yet set in stone
It is important to note that this victory for the taxpayer is not yet set in stone. The High Court has suspended the order of invalidity for 24 months to provide Parliament with the necessary time to remedy theunconstitutional clause and align the VAT Act with the Constitution. Furthermore, under our judicial system, any High Court declaration that an Act of Parliament is unconstitutional must be confirmed by the Constitutional Court before it carries final legal weight. In the interim, the Minister of Finance retains the right to appeal the judgment to a higher court, should the Executive believe the ruling misinterprets the constitutional limits of delegated power. This means that while a powerful legal principle has been established, the ultimate transformation of our tax process will depend on the upcoming judicial confirmations and the speed of legislative reform. The ruling casts a long shadow over other indirect taxes!
Furthermore, the legal logic underpinning this ruling is unlikely to remain siloed to VAT alone. The principle of impermissible delegation now casts a long shadow over other indirect taxes that have historically been adjusted via executive notice. Specifically, instruments governed by the Customs and Excise Act, such as the Fuel Levy and excise duties on alcohol and tobacco (commonly known as sin taxes), are now legally vulnerable. Like VAT, these taxes are collected at the point of sale and are essentially irreversible once paid by the consumer. If the Minister announces an increase in the fuel levy that takes effect at midnight, every motorist immediately pays a tax that has not yet been debated by Parliament. By applying the court’s reasoning, these notice-based adjustments may also be found to bypass the necessary legislative hurdles, signalling that the era of immediate, post-budget implementation for any indirect tax is rapidly coming to an end. A Legislature-First approach must now become the standard for the entire revenue framework to remain constitutionally sound.
Is South Africa a misnomer?
One might ask if South Africa was unique in allowing the Minister such power. In truth, we were becoming an outlier or we were one. In many robust democracies, such as the United States or even closer peers in the Commonwealth, the executive branch cannot collect a single cent of a new tax until the legislature has signed off on the final bill. In the United Kingdom, while some provisional collections exist, they are subject to immediate and rigorous parliamentary confirmation. South Africa’s previous reliance on Gazette notices was a shortcut that drifted away from global best practices of transparency. By striking down this clause, the court has brought our fiscal architecture back into alignment with international standards of legislative supremacy.
Conclusion: Strengthening the Foundation
The 2026 Budget was presented as a fiscal turning point, but the Western Cape High Court has provided the most significant turning point of all. It has reminded us that the budget process is not a private conversation between the Treasury and the markets; it is a public contract between the State and its citizens. As we walk into Parliament this Tuesday, the stakes are higher. The public hearings are no longer a post-script to a decision already made; they are now the primary arena where our fiscal future is decided. We have successfully defended the principle that in South Africa, the people, through their Parliament, hold the power of the purse.
By: Prof Dumisani Jantjies is a Lead Macroeconomic and Fiscal Analyst, Professor of Practice at the University of Johannesburg, and Chairperson of the African Network of Parliamentary Budget Offices (AN-PBO)
www.sabcnews.com, https://www.sabcnews.com/sabcnews/no-taxation-without-representation-why-march-western-cape-high-courts-vat-ruling-restores-power-to-parliament-or-people/
