Pretoria, April 2025 — In a formal answering affidavit submitted to the court, South Africa’s Minister of Finance has defended government decisions related to recent fiscal policy, including the now-reversed Value-Added Tax (VAT) hike. The affidavit, released publicly via the National Treasury’s website, forms part of the state’s response to a legal challenge questioning the constitutionality and procedural soundness of budget decisions.

The affidavit addresses key concerns raised by applicants—including civil society groups—who argue that the proposed VAT increase and related budget adjustments may violate constitutional obligations to progressively realize socio-economic rights.

The Minister outlines that the initial VAT proposal, announced in the February Budget Speech, was a necessary but temporary fiscal measure to stabilise public finances and fund essential services. He asserts that all decisions were made within legal frameworks, and that extensive consultations, including with parliamentary committees, informed the reversal of the VAT increase.

The document further elaborates on the Ministry’s rationale for withdrawing the Appropriation and Division of Revenue Bills. According to the Minister, this step was taken to ensure Parliament could revise the expenditure framework in light of the expected R75 billion revenue shortfall following the VAT reversal. He emphasises that any new fiscal measures will be guided by constitutional principles and public interest.

The affidavit also reiterates government’s commitment to protecting vulnerable groups and maintaining service delivery, despite fiscal constraints. It acknowledges the socio-economic challenges facing South Africa and stresses that budget decisions are made with consideration of both immediate needs and long-term sustainability.

This legal development follows closely on the heels of a media statement issued on 24 April 2025, confirming the government’s decision to maintain the VAT rate at 15%. That decision came after widespread political and public pressure, prompting the Finance Ministry to commit to revising budget proposals accordingly.

The matter remains before the courts, with civil society organisations maintaining that greater transparency and public participation are needed in shaping fiscal policy that directly affects low-income households. (Source)