Latest news with #Value-AddedTax
IOL News
6 days ago
- Business
- IOL News
EFF threatens court action over proposed fuel levy increase
EFF treasurer-general Omphile Maotwe has written to Finance Minister Enoch Godogwana rejecting the fuel levy. Image: Nhlanhla Phillips / Independent Newspapers The EFF has written to Finance Minister Enoch Godongwana, with an ultimatum, demanding the withdrawal of the proposed fuel levy increase, citing constitutional and legislative obligations or face more court action. The party argues that the increase, effective June 4, 2025, is a regressive tax that will disproportionately affect the working class and poor. Godongwana was given 48 hours to respond to the Red Berets' demands, or risk further escalation of the Budget crisis. Godongwana's spokesperson, Mfuneko Toyana, declined to comment on the matter; however, confirmed that the department had received the letter. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ The Budget is, however, yet to be passed in the National Assembly. The EFF's letter comes amid the ongoing drama surrounding the 2025 Budget. The party, with the help of the Government of National Unity (GNU) aligned DA, had previously successfully challenged the Value-Added Tax (VAT) increase in court, which was declared invalid and withdrawn. However, the National Treasury has now proposed to increase the general fuel levy by 16 cents per litre on petrol and 15 cents per litre on diesel, as outlined in the May 2025 Budget Review. In a lengthy letter penned by party treasurer-general, Omphile Maotwe, the EFF argues that the fuel levy increase will have a devastating impact on the working class and poor, exacerbating the cost-of-living crisis and placing undue pressure on households already struggling with rising food and transport prices, stagnating incomes, and unemployment. "The proposed fuel levy increases, though seemingly modest in nominal terms, will have disproportionate effects on the working class and poor, as they cascade through transport, food, and essential goods pricing," Maotwe wrote. The EFF also argues that the fuel levy increase is unconstitutional, as it seeks to impose a national tax through executive regulation rather than through a legislative process governed by the Constitution and relevant statutes. "The fuel levy is a national tax, paid by every South African, directly or indirectly. It cannot be increased through a Government Gazette notice or regulation," the party said. The EFF has formally requested that the minister withdraw the proposed increase. The party has also demanded that the minister refrain from issuing any Gazette or regulatory notice under the Customs and Excise Act until this tax measure has been lawfully processed via a Money Bill.
IOL News
02-05-2025
- Business
- IOL News
Impact of VAT increase suspension on local government budgets
Parliament's Settlement on VAT Hike: Implications for Municipal Budgets Image: Armand Hough / Independent Newspapers Following the scrapping of the planned 0.5% increase in Value-Added Tax (VAT), initially scheduled to come into effect on May 1, 2025, several previously approved municipal budgets have also been set aside, further complicating local government financial planning. This suspension means that not only is the national budget process delayed, but local government budgets—previously approved and scheduled for implementation—are also temporarily on hold, affecting service delivery and development projects at the municipal level. The ripple effects underscore the broader economic and administrative uncertainty created by the legal and political developments surrounding the VAT hike. On April 27, 2025, Parliament entered into an out-of-court settlement concerning the contentious VAT hike and the broader 2025 Fiscal Framework. The settlement, sanctioned by the Cape High Court, suspends the implementation of VAT increases and sets aside the resolutions adopted by Parliament's two Houses—the National Assembly and the National Council of Provinces—regarding the Fiscal Framework. This means that the original Appropriation Bill, which details government spending and allocates funds to various departments, has been withdrawn and is no longer before Parliament. As a result, Parliament said the scheduled budget votes—crucial steps in the legislative process, are currently on hold. It also stated that municipal budgets, already approved for the current financial year, are being set aside. What Happens Next? Parliamentary spokesperson Moloto Mothapo explained that a new Appropriation Bill and revised budget instruments must be drafted and introduced through the upcoming Budget Speech. Once these are tabled, the legislative Houses must reschedule their review and approval processes. 'A new Appropriation Bill and revised budget instruments will need to be introduced, after which the budget votes will be scheduled afresh by the legislative framework and parliamentary procedures,' Mothapo stated. He emphasised that the National Assembly and the National Council of Provinces must review and restructure their programs accordingly. The respective Programme Committees will set new timelines to ensure that all legislative steps are completed efficiently and that the budget is passed within the legally prescribed timeframes, in line with the Money Bills and Related Matters Act, 2009.
The Citizen
27-04-2025
- Business
- The Citizen
Western Cape High Court orders scrapping of the 0.5% VAT hike
Despite Enoch Gondongwana's recent announced that the VAT hike has been reversed, the court ruled in favour of the DA and EFF. National Treasury has been dealt another blow after the Western Cape High Court ordered the scrapping of the 0.5% VAT increase until Parliament passes legislation making Finance Minister Enoch Godongwana's decision to reverse the VAT hike an act of Parliament. The court made the order on Sunday in the DA and EFF's court challenge to have the VAT rate adjustment set aside. Order Despite Gondongwana's recent announcement that the VAT hike has been reversed, the court ruled in favour of the DA and EFF. 'The Minister of Finance's announcement on 12 March 2025 made under section 7(4) of the Value-Added Tax Act 89 of 1991, whereby the Value-Added Tax (VAT) rate was adjusted as follows 'the first 0.5 percentage point increase in the VAT rate will take effect on 1 May 2025 and the second 0.5 percentage point increase will take effect on 1 April 2026', is suspended pending the passing of legislation regulating the VAT rate or the final determination of Part B whichever occurs first.' In the ruling, the court also overturned the resolution of the National Assembly (NA) adopting the report of the Joint Standing Committee on Finance on the Fiscal Framework and Revenue proposals adopted earlier this month. 'The resolutions of the National Assembly and the National Council of Provinces, adopted on 2 April 2025, to accept the report of the Standing Committee on Finance and the Select Committee on Finance, on the 2025 Fiscal Framework, are set aside.' ALSO READ: DA files supplementary affidavit to block the proposed VAT hike Court costs National Assembly Speaker Thoko Didiza and National Council of Provinces Chairperson Refilwe Mtshweni-Tsipane have also been ordered to pay 50% of the legal costs, including costs to two senior counsel. The court's order is subject to Part B of the DA's application, which seeks to have the VAT Act declared unconstitutional. DA affidavits During the weekend, the DA and EFF filed supplementary papers in the multilayered court case. In the affidavit, the DA also argued that, even if the High Court sets aside the fiscal framework, which Parliament now agrees it should, it won't prevent the VAT increase from kicking in next week. 'The SA Revenue Service's apparent view to the contrary is plainly wrong. Its advice to vendors – which contradicts the minister's own position – creates further legal confusion,' the DA said in the affidavit. ALSO READ: Treasury reverses proposed VAT hike, will remain at 15% EFF affidavit In their court filing, the EFF expressed 'deep concerns' about the conduct of the Speaker of the National Assembly and parliamentary secretaries, accusing them of entangling Parliament in partisan politics. The EFF said that South Africa currently has no lawful budget, arguing that the fiscal framework and revenue proposals were adopted through processes that violate the Constitution and the Money Bills Amendment Procedure and Related Matters Act. 'The only legitimate and practical way forward is a full reset of the 2025 budget process to re-establish constitutional compliance and fiscal legitimacy,' the EFF asserted. Vat reversed The High Court's order comes after Gondongwana's decision to withdraw the VAT increase and also offer the DA an out-of-court settlement in its application. The VAT rate was scheduled to rise to 15.5% on 1 May, but growing political and public pressure placed Finance Minister Enoch Godongwana under strain to abandon the proposed increase. Treasury said it will 'consider' other proposals as potential amendments in upcoming budgets. ALSO READ: EFF calls for resignation of Godongwana amid VAT fiasco
The South African
27-04-2025
- Business
- The South African
Here's what SARS had to say about the VAT hike reversal
The South African Revenue Service (SARS) has confirmed that it will implement Finance Minister Enoch Godongwana's decision to reverse the planned 0.5% increase in Value-Added Tax (VAT), which was initially set to come into effect on 1 May 2025. SARS Commissioner Edward Kieswetter acknowledged the Finance Minister's announcement, noting the 'significant practical implications' for both VAT vendors and consumers. In a statement, Kieswetter stressed that SARS, as the administrator of national tax measures, would ensure the necessary adjustments are made promptly. The reversal follows the Minister's media statement and the publishing of Government Notice No. 6157 of 24 April 2025, alongside the Rates and Monetary Amounts and the Amendment of Revenue Laws Bill, which Parliament is expected to pass shortly. Vendors who have not yet implemented the 15.5% VAT rate should immediately stop any system changes. any system changes. All vendors must charge VAT at 15% for goods and services in line with the VAT Act from May 1, 2025. for goods and services in line with the VAT Act from May 1, 2025. Vendors unable to adjust their systems immediately may continue charging 15.5% until no later than May 15, 2025 but must report these correctly on VAT returns. but must report these correctly on VAT returns. VAT charged at 15.5% must be reported in Field 12 (output tax) and Field 18 (input tax) of the VAT return. and of the VAT return. Refunds or adjustments related to the 0.5% overcharge must also be reflected in Fields 12 and 18. The VAT return system will auto-calculate VAT at 15% for all tax periods starting on or after May 1, 2025. for all tax periods starting on or after May 1, 2025. Vendors who have already fully implemented both the 15.5% rate and any associated zero-rating are encouraged to reverse these changes before May 1. Kieswetter acknowledged the confusion the reversal has caused, stating: 'We understand the complexity and confusion that has resulted from this process. SARS will do its best to provide further clarity to create certainty of obligation for all vendors.' The VAT rate adjustment process comes after a period of public uncertainty and Parliamentary debate. SARS has promised to support vendors through the transition with further guidance as necessary. Vendors and taxpayers are urged to stay updated via official SARS communications as the May 1 deadline approaches. Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1 Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.
The Citizen
25-04-2025
- Business
- The Citizen
What are we celebrating? A Worker's Day with no work?
It may seem like a VAT increase freeze is a crisis averted, but the revenue shortfall will lead to big problems down the road. There is nothing more frightening than facing your first wave. The joys of the beach disappear quickly as a mighty wall of water hurls towards you. It seems to bring with it guaranteed doom. Most of the time, you brace for impact, let it crash over you, and pick yourself up. If you are brave and the circumstances are right, you dive under it and come out the other side with minimal fuss. As we prepare for the arrival of May next week, we may have been forgiven for feeling like we are in those final few seconds of pull before the wave comes. Getting poorer On the same day that we commemorate Workers' Day and the rights of the labourer, a Value-Added Tax (VAT) increase would have kicked in. The National Treasury reversed it just days before it was set to be implemented. But amid the relief was the warning that revenue will now fall short by around R75 billion over the medium term. Like passing under the swell, it may seem like an immediate crisis averted, but this shortfall will likely lead to fewer jobs, hampered service delivery, and more hikes down the road. The cost-of-living wave is growing and is one of the government's own making. Years of neglect and corruption have led to a culture of wasteful expenditure. A recent report of R91 000 laptops being procured by the Mpumalanga education department reminds us of this. When we ask why any government official needs such an expensive laptop when a much cheaper alternative will do, we must also ask why the Cabinet has so many ministers and deputy ministers. We must also ask why lawmakers continue to get 'cost-of-living' salary increases while those they serve lose their jobs or pay more to be counted among the working class. ALSO READ: A VIEW OF THE WEEK: Forget VAT and trim the fat of corruption Economic slavery and no work Workers' Day, celebrated next Thursday, is meant to celebrate the achievements of workers in ending exploitation, but all we see in SA is further economic slavery and a labour crisis. Nearly two in every five eligible South Africans do not have a job or are discouraged from seeking work. This number jumps to almost three in five young people when you look at those between 15 and 24 years old who are actively seeking work but unable to find it. This is made even more concerning when programmes like the Presidential Youth Employment Initiative (PYEI) seem to have been a total failure. A report by the education department this week revealed the findings of a recent survey on life after the initiative. It found that while the programme was supposed to create meaningful opportunities for future work, most who finished it were still sitting at home and collecting social grants. Less than 1% went on to get any assistance for future studies. ALSO READ: A VIEW OF THE WEEK: Got money problems MPs? What about the rest of us? So what is there to celebrate? Is Workers' Day just a public holiday to sleep in and avoid the daily taxi wars, while those filled with their own grandeur reflect on past victories? Through shrewd politicking, the ANC has made its Tripartite Alliance labour partner, the Congress of South African Trade Unions (Cosatu), almost completely irrelevant. It has undermined it, cut off its power instead of amplifying it, and milked it for all it can, much like the exploitation the union was created to avoid. It has enriched only a few, to blind them to the coup. And it is only now that their feeding trough has shrunk that they suddenly care. The wave is coming, and South Africa will survive, even if flustered. But not with much help from those who were meant to help it stay afloat. NOW READ: A VIEW OF THE WEEK: Preparing for departure, SA. Have you packed your bags?
