IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
Reportable
Case No.: 2025-045530
In the matter between:
DEMOCRATIC ALLIANCE Applicant
and
MINISTER OF FINANCE First Respondent
COMMISSIONER, SOUTH AFRICAN
REVENUE SERVICES Second
Respondent
SPEAKER OF THE NATIONAL ASSEMBLY Third Respondent
CHAIRPERSON OF THE NATIONAL
COUNCIL OF PROVINCES Fourth Respondent
Coram: Cloete J, Francis J et Lekhuleni J
Heard: 28 and 29 January 2026
Delivered: 5 March 2026
Summary: Constitutional Law – Section 7(4) of the V AT Act 89 of 199 1–
impermissible delegation of legislative power to the Minister – Section 7(4)
authorising the executive to determine rate of tax that applies across the
economy - delegated power not accompanied by express statutory criteria
governing the magnitude of the alteration, nor requiring parliament’s ratification
within a defined short period after its exercise - No sufficiently defined statutory
limits or mechanisms of prompt legislative control to ensure that the balance
between executive agility and parliamentary supremacy is maintained - section
7(4) declared unconstitutional and invalid as it constitutes an impermissible
delegation of legislative power to the executive.
________________________________________________________________
ORDER
________________________________________________________________
1. It is declared that s ection 7(4) of the Value -Added Tax Act 89 of 1991 is
inconsistent with the Constitution of the Republic of South Africa, 1996
(the Constitution), and invalid.
2. The declaration of invalidity in paragraph 1 of this order is suspended for a
period of twenty four (24) months from the date of this order to afford
Parliament an opportunity to correct the defect.
3. In terms of section 172(2)(a) of the Constitution, the declaration of
invalidity in paragraph 1 is referred for confirmation or otherwise by the
Constitutional Court.
4. The applicant’s application for a declaratory order in respect of the first
respondent's announcement of 12 March 2025 is dismissed.
5. The first and second respondents shall pay the applicant’s costs, jointly
and severally, the one paying the other to be absolved, on Scale C (party
and party) and including the costs of two counsel where so employed.
6. The Registrar is directed to transmit the record of these proceedings,
including this judgment, to the Registrar of the Constitutional Court within
10 court days of the date of this order.
JUDGMENT
FRANCIS J (CLOETE J and LEKHULENI J concurring)
Introduction
[1] This application concerns the constitutional validity of section 7(4) of the
Value-Added Tax Act 89 of 1991 ( ‘the V AT Act’). The provision empowers the
Minister of Finance (‘the Minister’) , by announcement in the national annual
budget, to alter the rate of value -added tax (‘V AT’) specified in section 7(1) of
the V AT Act. The altered rate takes effect from a date determined by the
Minister and remains operative for up to 12 months, subject to Parliament
passing legislation giving effect to the announcement within that period.
[2] The applicant, the Democratic Alliance ( ‘the DA’), brings an abstract
constitutional challenge. It seeks an order declaring section 7(4)
unconstitutional and invalid, together with declaratory relief concerning the
Minister’s budget announcement of 12 March 2025.
[3] The Minister and the Commissione r for the South African Revenue
Service ( ‘SARS’) oppose the application. The Speaker of the National
Assembly and the Chairperson of the National Council of Provinces were cited
by virtue of their offices and have not participated actively. Accordingly, and for
convenience, I will refer at times to the Minister and SARS collectively as “the
respondents”.
[4] The matter raises questions concerning the separation of powers, the
constitutional allocation of taxing authority, and the permissible limits of
legislative delegation.
[5] These questions arise against the backdrop of a well -established
constitutional principle: that the power to tax is an incident of representative
democracy and is reserved for elected legislative bodies. But the content and
limits of tha t principle, and its interaction with the practical exigencies of
modern fiscal governance, lie at the heart of the dispute before us.
Factual and legislative background
[6] Section 7(1) of the V AT Act imposes V AT ‘for the benefit of the National
Revenue F und’ at a rate of 15 per cent on specified taxable supplies and
importations.
[7] Section 7(4) provides that if the Minister announces in the national
annual budget that the V AT rate is to be altered, the alteration becomes effective
from a date determined in the announcement and continues to apply for 12
months, subject to Parliament passing legislation giving effect to that
announcement within that period.
[8] The altered rate thus derives immediate legal force from executive
announcement. Parliament’s role is confined to subsequent ly deciding whether
or not to confirm the altered rate through legislation.
[9] This provision operates within the broader statutory framework governing
the national budget. Section 27 (1) of the Public Finance Management Act 1 of
1999 (‘PFMA’), requires the Minister to table the annual budget for a financial
year in the National Assembly before the start of that financial year or, in
exceptional circumstances, on a date as soon as possible after the start of that
financial year, as the Minister may determine . Section 7 (2) of the Money Bills
and Related Matters Act 9 of 2009 ( ‘the Money Bills Act ’) provides that the
budget documentation must include a proposed fiscal framework, which sets out
estimates of revenue, expenditure, borrowing and debt -service costs for the
ensuing three financial years. Section 7 read with 8 of the Money Bills Act
requires Parliament, within 16 days of the tabling of the budget, to adopt or
amend the fiscal framewo rk. Once adopted, the fiscal framework becomes the
cornerstone of the budgetary process: all subsequent revenue and appropriation
bills must be consistent with it.
[10] It is within this legislative ecosystem that section 7(4) operates. The
Minister may, as p art of the budget, announce a change to the V AT rate. That
change is reflected in the revenue proposals underpinning the fiscal framework.
Parliament, in considering the fiscal framework, is made aware of the proposed
alteration and may, by amending the fi scal framework or by declining to pass
confirmatory legislation, express its disapproval. The practical and legal
effectiveness of these parliamentary checks is a matter of sharp dispute between
the parties.
[11] On 12 March 2025, the Minister, delivering th e national budget,
announced an alteration to the V AT rate in terms of section 7(4). The
announcement provided for an increase from 15% to 15,5% with effect from 1
May 2025, and a further increase to 16% with effect from 1 April 2026 . The
announcement was met with significant political opposition. On 21 April 2025,
the Speaker of the National Assembly informed the Minister that the adoption of
the fiscal framework report was subject to conditions, including that alternative
revenue proposals be explored. On 22 and 23 April 2025, the Minister engaged
with political parties to seek alternative fiscal measures.
[12] On 24 April 2025, the Minister announced that a Rates and Monetary
Amounts and Revenue Laws Bill would be introduced to reverse the V AT
increase. On 25 April 2025, he withdrew the Appropriation Bill and the Division
of Revenue Bill that had accompanied the March budget. On 27 April 2025, this
Court issued an order by agreement suspending the operation of the Minister's
12 March announcement pending the final determination of Part B of this
application (which is what we are seized with) or the pass ing of legislation
regulating the V AT rate, whichever occurred first.
[13] On 21 May 2025, the Minister tabled a new budget in Parliament. In his
budget speech, he stated: "And as I have already said, the proposed increases in
the VAT rate in 2025/26 and 2026/27 have been dropped ". The Rates and
Monetary Amounts and Revenue Laws Bill, which remains before Parliament,
contains a clause providing that the 12 March 2025 announcement " does not
come into effect", effectively providing that the V AT rate will remain unchanged
at 15%. The legislative intervention t ook effect from 1 May 2025, even though
the bill has not yet been enacted. SARS confirmed that it expected the Bill to be
enacted in early 2026.
[14] It is against this factual matrix that the parties' legal contentions must be
evaluated.
The parties' submissions: an overview
[15] The DA's case, as pleaded in its founding affidavit, rests on two
constitutional pillars. First, it contends that section 7(4) delegates to the
Minister the power to impose, increase or reduce a national tax – a power that
the Constitution reserves exclusi vely to Parliament and that may not be
delegated to the executive. This, it submits, is an absolute prohibition; once a
provision is found to delegate a taxing power, it is axiomatically
unconstitutional. Second, it contends that section 7(4) delegates ple nary
legislative power to the Minister to amend section 7(1) of the V AT Act, and that
such delegation is impermissible regardless of the presence of safeguards or the
limited duration of the power.
[16] In argument, the DA advanced two further contentions. It argued that
section 7(4) violates section 77 of the Constitution, which prescribes the
procedure for the enactment of money bills. It also argued, in the alternative,
that even if there is no absolute prohibition on the delegation of plenary powers,
the d elegation in section 7(4) fails the context -specific, factor -based test
articulated by the Constitutional Court in Nu Africa1.
[17] The respondents raised a threshold procedural objection. They submitted
that the DA's founding papers pleaded only an absolutis t case, and that the
1 Nu Africa Duty Free Shops (Pty) Ltd v Minister of Finance and Others 2024 (1) SA 587 (CC).
arguments concerning section 77 and the Nu Africa factors were not properly
before the Court. They contended that the DA could not, in reply or in oral
argument, introduce new causes of action that were neither pleaded nor
foreshadowed in its founding affidavits.
[18] On the merits, the Minister and SARS drew a sharp distinction between
the delegation of the power to impose a new tax and the delegation of the power
to alter the rate of an existing tax. They submitted that all the authoriti es relied
upon by the DA – Fedsure2, Shuttleworth3, Casino4 and Mohlaba5 – concerned
the former, and that section 7(4) falls squarely within the latter, constitutionally
permissible category. They further contended that the dominant purpose of
section 7(4) is not revenue -raising but sound fiscal management, rendering the
power regulatory in nature and outside the prohibition on delegating taxing
powers.
[19] In relation to the plenary power challenge, the respondents submitted that
there is no absolute rule against the delegation of plenary legislative power.
They traced the evolu tion of the Constitutional Court's jurisprudence from
Executive Council 6 through Mpumalanga Department of Education 7 and
Smit8 to Nu Africa and contended that Nu Africa has definitively settled the
matter: the validity of a delegation depends on a conte xt-specific inquiry into
the nature, scope and constraints of the power, not on rigid categorisation. They
2 Fedsure Life Assurance Ltd v Greater Johannesburg Transitional Metropolitan Council 1999 (1) SA 374
(CC).
3 South African Reserve Bank v Shuttleworth 2015 (5) SA 146 (CC).
4 Casino Association of South Africa and Others v Member of the Executive Council for Economic
Development Environment Conservation and Tourism and Others 2024 (5) BCLR 611 (CC).
5 Mohlaba and Others v Minister of Co -operative Governance and Traditional Affairs and Others 2025 (4)
BCLR 458 (CC).
BCLR 458 (CC).
6 Executive Council of the Western Cape v Minister for Provincial Affairs and Constitutional Development
and Another; Executive Council of KwaZulu -Natal v President of the Republic of South Africa and Others
2000 (1) SA 661 (CC).
7 Mpumalanga Department of Education v Hoërskool Ermelo 2010 (2) SA 415 (CC).
8 Smit v Minister of Justice and Correctional Services 2021 (1) SACR 482 (CC).
further argued that section 7(4) does not delegate plenary power at all, but
merely a limited, temporary power to adjust one component of an existing tax.
[20] The respondents cited international precedent in support of their case. For
example, i n Ontario English Catholic Teachers' Association ,9 the Supreme
Court of Canada upheld a delegation permitting the executive to adjust tax rates
in certain circumstances, emphasi sing that express statutory authority and
parliamentary oversight render such delegations permissible under the principle
of no -taxation-without-representation (as reflected in section 53 of the
Constitution Act, 1867 (Canada)). The Court noted that temporary or
conditional delegations do not violate core democratic controls on taxation
when confined and subject to legislative confirmation or reversal.
[21] In the United Kingdom, the delegation of rate -setting powers is
commonplace and reflects a long-standing practice compatible with
parliamentary supremacy and the no -taxation-without-representation principle.
In Wilts United Dairies 10 the Court of Appeals affirm ed that part of the
domestic law f lows from Parliament and that delegation by Parliament to the
Executive of tax or rate-setting powers is permissible in principle, provided that
it is done in the clearest terms. The House of Lo rds reaffirmed this decision 11
which is regarded as embodying a fundamental principle. 12
[22] In the United States, the Supreme Court has addressed delegations
involving fiscal or quasi -tax powers under the non -delegation doctrine which
has been framed through the requirement that C ongress articulate an
9 Ontario English Catholic Teachers' Association v Ontario (Attorney General) 2001 SCC 15; [2001] 1 SCR
470 (para 73).
10 Attorney General v Wilts United Dairies Limited (1921) (37) T.L.R. 884 (CA).
11 Attorney General v Wilts United Dairies Limited (1922) 38 T.L.R. 781 (HL).
11 Attorney General v Wilts United Dairies Limited (1922) 38 T.L.R. 781 (HL).
12 O’Brien & Ors v Independent Association [2007] UKHL 10 (14 March 2007) , dissenting judgment of Lord
Roger Earlsferry at para 66.
‘intelligible principle’ to guide delegated authority. Although the Supreme Court
invalidated delegations in Panama Refining 13 and Schechter Poultry 14
subsequent jurisprudence has a dopted a deferential approach, sustaining
delegations where guiding standards are discernible. Thus, for example, in
Skinner15, the Court upheld a delegation authori sing the Secretary of
Transportation to establish user fees (with revenue-raising elements) where
Congress provided an intelligible principle and the delegation was not excessive
(also see, Mistretta16).
[23] The respondents argued that these cases illustrate that even in
jurisdictions with strict non -delegation scrutiny, l imited delegations of rate -
adjustment powers (especially temporary or regulatory in character) are
constitutionally tolerable when constrained by statutory limits and
parliamentary/executive checks.
[24] The respondents contended that South African jurisprudence, as
developed in cases such as Executive Council 17, aligns with these foreign
approaches by permitting context -specific delegations rather than imposing
absolute prohibitions. A blanket invalidation of section 7(4) would diverge from
this comparative tolerance for pragmatic fiscal delegations in modern
governance.
[25] Finally, the respondents submitted that the relief sought in respect of the
March 2025 announcement is moot. The Minister’s announcement on 12 March
2025 is no longer of any force and effect, and it has been overtaken by the
announcement withdrawing the proposed V AT rate increase on 21 May 2025.
13 Panama Refining Co. Ryan 293 U.S 388 (1935).
14 Schechter Poultry Corp v United States 295 U.S 495 (1935).
15 Skinner v Mid-America Pipeline Co. 490 U.S. 212 (1989) (at 223).
16 Mistretta v United States 488 U.S. 361 (1989).
17 Executive Council above n 6 para 63.
[26] We turn now to evaluate these submissions, beginning with the
procedural objection, then addressing each substantive challenge in turn, and
finally considering the appropriate remedy.
The procedural objection
[27] Before turning to the merits, it is necess ary to address a threshold
objection raised by the respondents. They contend that the DA’s founding
affidavit advanced an absolutist case — namely, that the power to tax and
plenary legislative power can never be delegated — and that the applicant
impermissibly sought in argument to advance alternative grounds based on
section 77 of the Constitution (relating to the enactment of money bills) and the
contextual approach articulated in Nu Africa.
[28] It is a settled principle that an applicant must make out its case in its
founding affidavit. Constitutional litigation is no exception. In My Vote Counts
NPC18, the Constitutional Court emphasised that a litigant must define the
issues in its founding papers and may not raise a new case in argument.
[29] The purpose of that rule is fairness. A respondent must know the case it is
called upon to meet. The question, therefore, is whether the applicant’s reliance
on section 77 and the contextual delegation analysis constitutes a new cause of
action or merely a refinement of the pleaded case.
[30] The DA’s founding affidavit challenged section 7(4) on the basis that it
delegated to the executive the power to impose, increase or reduce a national tax
and that it delegated legislative power to amend an Act of Parliament. The
18 My Vote Counts NPC v Speaker of the National Assembly [2016] 1 All SA 1 (CC) para 177.
affidavit referred expressly to the constitutional framework governing money
bills and to the principle that only Parliament may impose national taxes.
[31] Although section 77 was not cited by number in every instance, the
constitutional principle derived from it was squarely invoked. The respondents
addressed that principle fully in their answering affida vits and heads of
argument. They cannot credibly claim surprise.
[32] As to the contextual delegation analysis, the factual substratum relevant
to that enquiry — including the breadth of the Minister’s discretion, the 12 -
month duration, the absence of statutory criteria, and the practical irreversibility
of V AT — was pleaded in detail. The respondents themselves relied on Nu
Africa in support of constitutionality and addressed the contextual factors
extensively.
[33] The DA’s reliance on section 77 and the cont extual approach does not
introduce a new factual case. It advances legal argument based on facts already
pleaded. Courts have recognised that a point of law arising from the pleaded
facts may be advanced provided it causes no prejudice.19
[34] We are persuaded that the respondents suffered no prejudice. The issues
were subsequently fully ventilated in affidavits and oral argument. The
procedural objection must therefore fail.
The delegation of the taxing power
[35] The DA's primary submission is that section 7(4) delegates to the
Minister the power to impose, increase or reduce a national tax – a power that
19 See inter alia Minister of Safety and Security v Slabbert [2010] 2 All SA 474 (SCA) para 12.
the Constitution vests exclusively in Parliament and that cannot be delegated to
the executive. This submission rests on a long line of Constitutional Court
authority.
[36] In Fedsure, this Court held that “the power of taxation and appropriation
of government funds is reserved to the legislature”20. In Shuttleworth, the Court
affirmed that " the power to tax resident s is an incident of, and subservient to,
representative democracy. the manner and the extent to which national taxes are
raised and appropriated must yield to the democratic will as expressed in law. It
is the people through their duly elected representatives who decide on the taxes
that residents must bear."21
[37] In Casino Association, the Court, interpreting Shuttleworth, held that the
determinative question is the dominant purpose of the impugned provision or
charge. If the dominant purpose i s to raise revenue for the general purposes of
government, the provision imposes a tax and must comply with the
constitutional requirements for money bills. If the dominant purpose is to
regulate conduct or defray the costs of regulation, the provision imp oses a
regulatory charge and may be delegated.22
[38] Most recently, in Mohlaba, Theron J stated:
"In accordance with these provisions, this Court has repeatedly held that there must be a
direct constitutional source for the power to impose a tax. The Constitution only affords a
taxing power to the three elected spheres ; and the power to tax cannot be delegated to the
Executive."23
20 Fedsure above n 2 para 44.
21 Shuttleworth above n 3 para 42.
22 Casino Association above n 4 paras 49-50.
23 Mohlaba above n 5 para 17.
[39] The DA submits that these authorities establish an absolute prohibition on
the delegation of any power that can be chara cterised as a taxing power. The
respondents, in contrast, submit that the prohibition is directed at the delegation
of the power to impose a new tax ab initio , and does not extend to the
delegation of the power to alter the rate of an existing tax that Par liament itself
has imposed.
[40] Which reading is correct? The distinction urged by the respondents finds
support in the facts of the cases upon which the DA relies. Fedsure concerned
the delegation by a municipal council of its power to levy rates to a mayo ral
committee – a delegation of the primary power to impose a tax. Casino
Association concerned a provincial Act that authorised the MEC to impose a
gambling levy by regulation; the tax did not exist until the MEC acted. 24
Mohlaba concerned the delegation by an Act of Parliament to traditional
councils of the power to impose tribal levies. In none of these cases was
Parliament, or a provincial legislature, delegating the power to adjust the rate of
a tax that it had already fully constituted and imposed.
[41] Nevertheless, we do not think the distinction can be pressed to the length
the respondents urge. The power to set the rate of a tax is not a minor or
incidental detail. It is, as the Supreme Court of Canada observed in Ontario
English Catholic Teachers' As sociation, "the defining feature of the tax. This
must be the case, for if the rate is zero, there is no tax."25 By parity of reasoning
in the South African context, to delegate the power to set the rate (even if the
rate is zero) is to delegate a substantial part of the taxing power itself.
24 Casino Association above n 4 para 1.
25 Ontario English Catholic Teachers' Association above n 9 para 73 at 520
[42] Moreover, the respondents' characterisation of the dominant purpose of
section 7(4) as ‘regulatory’ or ‘sound fiscal management ’ does not withstand
scrutiny. The long title of the V AT Act declares its purpose to be “to provide for
taxation in respect of the supply of goods and services and the importation of
goods”. Section 7(1) itself states that the tax is levied “for the benefit of the
National Revenue Fund”. The Minister, in his answering affidavit, described the
purpose of section 7(4) as being “to ensure timely revenue to support
anticipated expenditures”. There is no suggestion in the text of the provision, or
in the evidence, that its dominant purpose is to regulate conduct or influence
behaviour. It is, and always has been, a revenue-raising mechanism.
[43] The more fundamental question is whether the prohibition on delegation
is absolute or qualified. The Constitutional Court has consistently us ed
categorical language: “the power to tax cannot be delegated to the Executive” 26.
It has not, in any of the cases relied upon by the parties, articulated exceptions
or qualifications to this rule. Yet it has also not had occasion to consider a case
factually analogous to the present one – a delegation, by Parliament, of the
power to temporarily adjust the rate of a tax it has already imposed, subject to
parliamentary override/ oversight? within a fixed period.
[44] We are therefore required to determin e, as a matter of first principle,
whether the constitutional prohibition on delegating the power to tax extends to
the delegation at issue. In doing so, we must be guided by the text and structure
of the Constitution, the purpose of the prohibition, and (inevitably in the
particular circumstances) the practical consequences of our decision.
[45] Section 77(1) of the Constitution defines a Money Bill as, among other
things, a bill that “imposes national taxes, levies, duties or surcharges ’ or
26 Mohlaba above n 5 para 17.
‘abolishes or re duces, or grants exemptions from, any national taxes, levies,
duties or surcharges ”. Section 77(3) provides that a Money Bill must be
considered in accordance with the procedure established by section 75. In turn,
section 75 deals with the passing of national legislation by Parliament.
[46] The Constitution thus expressly contemplates that the imposition,
abolition and reduction of national taxes are acts that must be performed by
Parliament through a prescribed legislative procedure. It says nothing, in term s,
about the delegation of the power to perform these acts. But the clear
implication is that such acts are reserved for Parliament itself; they are not
matters that may be assigned to the executive.
[47] Does a temporary alteration of the V AT rate constitut e an imposition or
reduction of a national tax? In our view, it does. When the Minister announces
an increase from 15% to 15,5%, he alters the quantum of tax payable on every
taxable supply. When he announces a decrease, he correspondingly reduces that
burden. The temporary character of the alteration does not deprive it of its
substantive effect. For so long as it operates, it determines the amount of tax
that must be paid and collected under the Act.
[48] It follows that the power conferred by section 7(4) is functionally
equivalent, for the period of its operation, to the power exercised by Parliament
when it amends section 7(1). The fact that the alteration is subject to later
parliamentary confirmation does not alter the reality that, during the interim
period, the applicable rate is fixed by executive announcement rather than by an
Act of Parliament.
[49] The respondents submit that section 77 regulates only the enactment of
primary legislation and does not preclude Parliament from authorising the
executive, through a money bill, to determine or adjust a tax rate within defined
bounds. For this submission , they rely on the minority judgment of Rogers J in
Nu Africa, where he held that sections 73 to 77 of the Constitution “in their
own terms only govern how legislation is to be enacted by Parliament”27 and are
inapplicable to the exercise of delegated powers by the executive. That
submission cannot be dismissed lightly. It is correct that Parliament enacted
section 7(4) itse lf through legislation that complied with the constitutional
requirements for money bills.
[50] However, the constitutional question is not whether Parliament followed
the correct procedure when enacting section 7(4), but whether the substance of
the power t hereby conferred is compatible with the constitutional allocation of
fiscal authority. Section 77 reflects the principle that decisions to impose, reduce
or abolish national taxes must be taken by the elected representatives of the
people in accordance wit h the prescribed legislative process. The permissibility
of delegating aspects of that decision must therefore be assessed through the
broader doctrine governing legislative delegation.
[51] We therefore do not treat section 77 as establishing an absolute
procedural bar to any delegation touching upon tax rates. Rather, it reinforces
the constitutional significance of the power in question and informs the intensity
of scrutiny required when Parliament confers authority upon the executive to
alter the incidence or quantum of a national tax.
The delegation of plenary legislative power
[52] The DA's second submission is that section 7(4) delegates plenary
legislative power to the Minister to amend section 7(1) of the V AT Act, and that
27 Nu Africa above n 1 para 183 (Rogers J).
such delegation is impermissible regardless of the presence of safeguards or the
limited duration of the power.
[53] The concept of plenary legislative power was defined in Smit as “the
authority to pass, amend or repeal an Act of Parliament. "28 The Court in Smit
held that " the legislature may not assign plenary legislative power to another
body".29
[54] The respondents submit that this statement, read in isolation, is
misleading. They trace the history of the doctrine from Executive Council 1. In
that case, Chaskalson P held that "[g]enerally speaking, plenary powers may
not be delegated, " but immediately acknowledged exceptions: " There may be
exceptional circumstances, such as a war and emergencies, in which there will
be a necessary implication that laws can be made without following the forms
and procedures prescribed by sections 59, 60 and 61."30
[55] More pertinently, Mahomed DP, in the same case, articulated a context -
specific, factor-based approach. He stated that these may include:
"the constitutional instrument in question, the powers of the Legislature in terms of that
instrument, the nature and am bit of the purported delegation, the subject -matter to which it
relates, the degree of delegation, the control and supervision retained or exercisable by the
delegator over the delegatee, the circumstances prevailing at the time when the delegation is
made and when it is expected to be exercised, the identity of the delegate e and practical
necessities generally."31
[56] This nuanced approach was endorsed by a unanimous Constitutional
Court in Mpumalanga Petitions Bill where Langa DP referred with approval to
28 Smit above n 8 para 31.
29 Ibid para 35.
30 Executive Council above n 6 para 62.
31 Executive Council above n 6 para 136 (Mahomed DP).
the "factors relevant to a consideration of whether the delegation of a law -making power is
appropriate"32 as articulated by Mahomed DP.
[57] The tension between the categorical statement in Smit and the contextual
approach of Executive Council and Mpumalanga Petitions Bill was resolved –
or at least substantially clarified – in Nu Africa. That case concerned section
75(15)(a) of the Customs and Excise Act 91 of 1964 and section 74(3) of the
V AT Act, which empowered the Minister to amend schedules to those Acts. The
Constitutional Court, per Mathopo J, held:
"The fallacy in Nu Africa's submission is that it would render every statute that permits a
Member of the Executive to amend a schedule unconstitutional without due regard to the
nature and extent and scope of the delegation or, indeed, the several factors laid down by
Mahomed DP in Executive Council. This absolutist approach is at odds with the rationale of
Executive Council. "33
[58] The Court went on to state:
"What Nu Africa loses sight of is that to determine whether a delegation constitutes an affront
to the Constitution, the inquiry should be context-specific and consideration should be given
to the scope of the delegation, the extent of the power, the presence or absence of safeguards
and parliamentary oversight, the purpose of the delegation, and the nature of the power
delegated."34
[59] The majority in Nu Africa did not purport to overrule Smit. It
distinguished it on the basis that Smit involved a delegation of the power to
create criminal offences by amending a schedule – a core legislative function of
a qualitatively different order, exercised with no clear and binding framework.35
But the reasoning of the majority is expressed in terms that are not confined to
schedule amendments. It repudiates, in clear and categorical language, the
32 In re Constitutionality of the Mpumalanga Petitions Bill, 2000, 2002 (1) SA 447 (CC) para 19.
33 Nu Africa above n 1 para 94.
34 Nu Africa above n 1 para 95.
33 Nu Africa above n 1 para 94.
34 Nu Africa above n 1 para 95.
35 Nu Africa above n 1 paras 91-92.
absolutist approach to delegation. It affirms t hat the validity of a delegation
depends on a context-specific inquiry into a range of factors.
[60] We are bound by this reasoning. It is the most recent pronouncement of
the Constitutional Court on the subject, and it is irreconcilable with the
proposition that the delegation of plenary legislative power is ‘always’
impermissible. The proper inquiry is whether, in the particular context of
section 7(4), the delegation is constitutionally permissible.
[61] Before undertaking that inquiry, we must address the DA's submission
that Nu Africa is distinguishable because it concerned schedules while section
7(4) amends the body of the Act. This submission elevates form over substance.
As th e Constitutional Court noted in De Reuck , schedules to a statute " form
part of the enactment ."36 The majority in Nu Africa expressly relied on this
principle.37 The Court did not treat the schedule amendments as qualitatively
different from amendments to the body of the Act; it treated them as
amendments to the Act itself, but found the delegation permissible because of
the regulatory nature of the power and the presence of adequate safeguards. The
same approach must apply here.
[62] Moreover, the respondents have pointed to numerous other provisions in
tax legislation that delegate to the Minister the power to determine or alter tax
rates, some of which are located in the body of the relevant enactment and some
in schedules. If the location of the provision were constitutionally
determinative, Parliament could easily relocate the V AT rate to a schedule and
thereby validate the delegation. The Constitution does not countenance such
36 De Reuck v Director of Public Prosecutions (WLD) 2004 (1) SA 406 (CC) para 37.
37 Nu Africa above n 1 para 91.
formalism. What matter s is the substance of the power delegated, not its
location in the statute.
Evaluating section 7(4) under the Nu Africa framework
[63] We turn then to evaluate section 7(4) against the factors identified in Nu
Africa, drawing also on the factors enumerated by Mahomed DP in Executive
Council. We do so cognisant that this is a qualitative assessment, weighing the
nature and extent of the power delegated against the safeguards and constraints
that accompany it, and considering the context in which the delegati on
operates.38
(a) The nature and scope of the delegated power
[64] Section 7(4) empowers the Minister to alter the V AT rate. This is a
significant power. It directly affects the tax burden borne by every consumer of
goods and services in South Africa. It is not a power to make minor, technical
adjustments; it is a power t o change the central charging provision of the V AT
Act. The Minister's discretion is, on the face of the provision, unfettered. There
is no statutory cap on the extent of the increase or decrease. There is no
statutory guidance on the circumstances in whic h the power may be exercised,
beyond the requirement that the announcement be made in the national annual
budget.
[65] We accept, as the respondents submitted, that the exercise of the power is
subject to the principle of legality and the requirement of rationality. But these
are background constitutional constraints that apply to all exercises of public
power. They do not compensate for the absence of specific, statutory constraints
38 Nu Africa above n 1 para 95; Executive Council above n 6 para 136 (Mohamed DP).
on the delegated power itself. As the DA submitted, t he contrast with other
jurisdictions – some of which impose caps on the percentage change or require
prompt parliamentary ratification – is striking.
[66] The respondents argue that the Minister is the constitutional actor best
placed to exercise this power, given his role in public finance and the
institutional expertise of National Treasury and SARS. We accept that the
Minister is a suitable delegate. But suitability does not answer the constitutional
question. The issue is not whether the Minister is an appropriate person to set
the tax rate; it is whether the Constitution permits Parliament to delegate that
power at all, and if so, under what conditions.
(b) The duration of the power
[67] The alteration operates for a maximum of 12 months. If Parliament does
not pass confirmatory legislation within that period, the alteration lapses and the
rate specified in section 7(1) revives. The temporary nature of the power is a
significant factor in its favour. It distinguishes this delegation from a permanent
cession of legislative authority.
[68] However, the temporary nature does not eliminate the constitutional
difficulty. For the duration of the 12 -month period, the operative tax rate is the
Minister’s rate, not Parliament’s rate. Parliament’s failure to act does not
invalidate the tax already collected; it merely prevents the alteration from
continuing beyond 12 months. The tax imposed during that peri od is, in every
practical sense, a tax imposed by the executive.
(c) Parliamentary oversight and control
[69] Section 7(4) expressly provides that the alteration is “ subject to
Parliament passing legislation giving effect to that announcement within that
period.” This is a significant safeguard. It ensures that the Minister’s alteration
cannot become permanent without the affirmative approval of Parliament.
[70] The Minister also pointed to Parliament’s power under section 8 of the
Money Bills Act to amend the fiscal framework. We accept that this is a further
mechanism by which Parliament can express its disapproval of a proposed tax
change. However, we do not ac cept that an amendment to the fiscal framework
has the legal effect of invalidating a section 7(4) announcement. The fiscal
framework governs the allocation of revenue and expenditure; it does not
override the substantive provisions of the V AT Act. The V AT rate remains as
announced unless and until Parliament amends the V AT Act itself.
[71] The respondents further rely on the Minister’s ability to reverse an
announcement under section 7(4), citing section 10 of the Interpretation Act 33
of 1957 39 and Kruger40. They submit that this adds an additional check and
balance, as demonstrated by the events of this case. We accept that the Minister
may, in appropriate circumstances, withdraw or reverse an announcement. But
this is a matter of executive grace, not of l egal compulsion. It does not
constitute a parliamentary check; it is a self -imposed restraint. Moreover, the
fact that the Minister withdrew the announcement in the face of political
opposition does not render the power any less sweeping in its potential exercise.
39 Section 10(3) “Where a law confers a power to make rules, regulations or by-laws, the power shall, unless the
contrary intention appears, be construed as including a power exercisable in like manner and subject to the like
consent and conditions (if any) to rescind, revoke, amend or vary the rules, regulations or by-laws.”
40 Kruger v President of the Republic of South Africa 2009 (1) SA 417 (CC) paras 60-61.
In our view, t he constitutionality of a provision must be assessed on the
assumption that the power will be exercised properly, not on the assumption that
it will be exercised benevolently.
[72] The reality is that Parliament’s primary check on the Minister’s power is
the requirement of confirmatory legislation within 12 months. This is a
meaningful check, but it is an ex post check. It operates after the tax has already
been imposed and collected. The irreversibility of V AT – a feature emphasised
repeatedly by the DA – means that even if Parliament withholds approval, the
public cannot recover the tax paid during the 12-month period.
(d) The necessity for speed and flexibility
[73] The respondents placed great weight on the need for fiscal agility. T hey
submitted that the mechanism in section 7(4) is necessary to enable the Minister
to respond quickly to changing economic circumstances, and that Parliament
cannot provide the same speed and certainty due to the inherent delays in the
legislative process. They pointed to the unique features of V AT, which cannot be
adjusted retroactively, and to the fact that money bills typically take between six
and twelve months to pass.
[74] We accept that responsive fiscal management is a legitimate
governmental objective, and that V AT’s collection mechanism makes retroactive
adjustment impracticable. We also accept that the legislative process takes time.
However, we are not persuaded that the mechanism in section 7(4) is the only
way to achieve fiscal agility, or that its absence would render responsible
budgeting impossible.
[75] Other taxes, such as income tax, are adjusted through a mechanism that
does not involve immediate, irreversible imposition. Changes are announced in
the budget and take effect only if and when Parliament passes confirmatory
legislation, often with retrospective effect. While we acknowledge that this
mechanism is not directly transferable to V AT because of the impossibility of
retroactive collection, the fact that the legislature has chosen a dif ferent path for
income tax does not mean that no alternative exists for V AT. Parliament could,
for example, require that any V AT increase be approved by a parliamentary
resolution within a short period, as is the case in some other jurisdictions.
[76] Moreover, the facts of this case demonstrate that the government was able
to respond to a revenue shortfall without resorting to an immediate V AT
increase. Following the political opposition to the March 2025 announcement,
alternative revenue and expenditure measures were identified and implemented.
This suggests that the mechanism in section 7(4), while convenient, is not
indispensable.
(e) The ubiquity of similar provisions
[77] SARS annexed to its papers a list of 22 provisions in various tax Acts that
delegate to the Minister the power to determine or alter tax rates. The Minister
also referred to numerous other statutes containing similar powers. This is a
relevant consideration. It demonstrates that the mechanism in section 7(4) is not
an isolated anomaly but a longstanding feature of South African tax
administration. Parliament has repeatedly and consistently chosen to structure
tax legislation in this way.
[78] The prevalence of comparable provisions across the statute book
underscores the importance of a careful, context -sensitive approach. It does not
follow that all delegations of rate -setting authority stand or fall together. The
constitutional assessment mus t remain attentive to the nature of the tax
concerned, the breadth of the discretion conferred, and the safeguards provided.
A delegation relating to a narrowly defined or sector -specific levy may raise
different considerations from one concerning a broadl y based consumption tax
that affects the general public. This is not to create a hierarchy of taxes, but to
recognise that the practical impact of a delegation may bear upon the adequacy
of the safeguards that accompany it.
(f) The nature of V AT and irreversibility
[79] The irreversibility of V AT is a feature that materially affects the weight to
be attached to the parliamentary safeguard in section 7(4). The requirement of
confirmatory legislation ensures that an alteration cannot endure beyond twelve
months without Parliament’s approval. It does not, however, require that
Parliament approve the alteration before it takes effect. During the interim
period, the rate determined by the Minister governs the liability of taxpayers.
[80] In the case of V AT, that in terim operation has particular practical
consequences. V AT is levied and collected on a transaction-by-transaction basis.
Once collected and paid into the fiscus, it is not ordinarily refundable merely
because Parliament later declines to confirm the alter ation. The parliamentary
check therefore operates prospectively, not retrospectively.
[81] The respondents submit that this is no different in principle from other
forms of delegated authority subject to later legislative oversight. That
submission has force. Yet the combination of immediate operation and practical
irreversibility distinguishes section 7(4) from delegations that merely regulate
administrative detail or that operate within a framework capable of meaningful
ex post correction.
[82] The effect is that, for the duration of the interim period, the financial
burden borne by the public is determined by executive act. Parliament retains
ultimate control over the continuation of the measure, but it does not exercise
prior control over its commencement. W hether that structure is constitutionally
permissible must be determined by weighing this feature against the safeguards
and purposes identified above.
(g) Weighing the factors
[83] Applying the Nu Africa framework to section 7(4), we are driven to the
following conclusions.
[84] The enquiry mandated by Nu Africa is contextual and evaluative. It
requires this Court to assess whether the nature and scope of the delegated
authority, viewed together with the safeguards and surrounding statutory
framework, fall wi thin constitutionally permissible bounds. Section 7(4) does
not confer an open-ended legislative mandate. It operates within an existing tax
regime enacted by Parliament and is temporally limited. These are weighty
considerations.
[85] At the same time, the provision authorises the executive to determine,
with immediate effect, the quantum of a broadly based national tax that applies
across the economy. The power is not accompanied by express statutory criteria
governing the magnitude of the alteration, nor d oes it require legislative
ratification within a defined short period after its exercise. For the duration of its
interim operation, the applicable V AT rate is fixed exclusively by executive
announcement.
[86] The cumulative effect of these features is that Parliament’s control over
the imposition of the altered rate operates only retrospectively and prospectively
— that is, by either confirming the measure or permitting it to lapse after twelve
months — but not contemporaneously at the point of imposition. I n the specific
context of V AT, whose operation is transaction -based and practically
irreversible, this structure assumes particular significance.
[87] We therefore hold that section 7(4) constitutes an impermissible
delegation of legislative power to the exe cutive. It is inconsistent with the
Constitution and invalid.
[88] We emphasise that our conclusion does not rest on a categorical
prohibition against delegating rate -setting authority, nor on the proposition that
fiscal responsiveness is constitutionally impermissible. It rests on the absence,
in the present design of se ction 7(4), of sufficiently defined statutory limits or
mechanisms of prompt legislative control to ensure that the balance between
executive agility and parliamentary supremacy is maintained. In our view, the
provision in its current form falls outside th e range of constitutionally
permissible delegation as contemplated in Nu Africa.
[89] Before concluding on the domestic analysis, and mindful of section
39(1)(c) of our Constitution, it is perhaps apposite to comment briefly on the
comparative foreign jurisprudence cited relating to the delegation of authority to
adjust tax rates. As noted elsewhere in this judgment, Canada, the United
Kingdom, and the United States all have a shared concern: delegation of rates -
setting authority is not per se impermissible, but its validity turns on design —
including articulated legislative policy, defined limits, and meaningful
parliamentary supervision. However, t he comparative material reveals no
uniform constitutional formula. Different systems calibrate the balance betw een
executive flexibility and legislative control in light of their own institutional
arrangements.
[90] While these foreign approaches illustrate that structured delegation of
rate-setting authority is not inherently incompatible with democratic fiscal
control, they do not displace the stricter contextual scrutiny required by Nu
Africa in our own constitutional setting. The ultimate question is therefore
whether section 7(4), assessed within our constitutional framework and in light
of the safeguards identified in Nu Africa , preserves legislative supremacy in
substance while permitting necessary fiscal responsiveness. For reasons already
given, section 7(4) does not.
Section 172(1)(a) – the order of invalidity
[91] Having found section 7( 4) constitutionally invalid, we are obliged under
section 172(1)(a) of the Constitution to declare it so. The further question is the
appropriate remedial response under section 172(1) (b), including whether the
declaration should operate with immediate eff ect or be suspended to afford
Parliament an opportunity to cure the defect.
[92] In determining the proper remedy, this Court must balance two
considerations. On the one hand, the defect we have identified concerns the
structure of fiscal authority and the allocation of legislative power — matters of
constitutional significance. On the other hand, section 7(4) forms part of a
broader and longstanding fiscal framework. Its immediate invalidation could
generate uncertainty in the administration of V AT and poten tially affect other
statutory mechanisms of a similar kind.
[93] The evidence before us indicates that Parliament has, over time, adopted
comparable rate -setting mechanisms in various fiscal statutes. An order of
immediate invalidity may therefore have impli cations extending beyond the
V AT Act alone. While the prevalence of similar provisions cannot shield an
unconstitutional mechanism from scrutiny, it is relevant to the practical
consequences of the remedy.
[94] We have concluded that the constitutional defect lies not in the concept of
delegated rate-setting authority as such, but in the breadth and structure of the
delegation in its present form — in particular, the absence of defined statutory
constraints and prompt parliamentary ratific ation. It is for Parliament to
determine how best to recalibrate the mechanism, whether -for example - by
introducing quantitative limits, requiring approval within a defined period, or
adopting some other constitutionally compliant design.
[95] In these circu mstances, a period of suspension is appropriate. It will
permit Parliament to consider and enact remedial legislation without
destabilising the fiscal system or creating uncertainty in tax administration.
[96] During the period of suspension of our order , sec tion 7(4) shall thus
remain operative. This ensures continuity and fiscal stability while preserving
Parliament’s responsibility , if our order is confirmed, to enact corrective
measures within the specified period.
The Minister’s March 2025 announcement
[97] The DA also seeks an order declaring the Minister’s announcement of 12
March 2025 unconstitutional and invalid. The respondents submitted that this
relief is moot.
[98] The announcement was suspended by this Court’s order of 27 April 2025
pending the final de termination of Part B of this application or the pass ing of
legislation regulating the V AT rate, whichever occurred first. In addition, the
Rates and Monetary Amounts and Revenue Laws Bill before Parliament
contains a clause providing that the 12 March 202 5 announcement ‘does not
come into effect ’. The Minister’s undisputed evidence is that he withdrew the
March 2025 announcement on 21 May 2025. The DA has not sought to impugn
the Minister’s May 2025 announcement.
[99] In these circumstances, the application for declaratory relief in respect of
the 12 March 2025 announcement is moot. No useful purpose would be served
by granting additional declaratory relief. The application for this relief is
accordingly dismissed.
Costs
[100] The DA seeks co sts only in the event of success and relies on the
Biowatch41 principle to resist an adverse costs order should it fail. The Minister
seeks costs against the DA, submitting that the Biowatch principle does not
41 Biowatch Trust v Registrar, Genetic Resources and Others 2009 (6) SA 232 (CC).
protect a political party pursuing a political agenda, and that the DA's
constitutional challenge was, as pleaded, frivolous and absolutist. SARS seeks
no costs order against the DA irrespective of the outcome.
[101] The DA's constitutional challenge has been substantially successful. It
has vindicated an important constitutional principle: that the power to impose,
reduce or abolish national taxes resides in Parliament and may not be delegated
to the executive in a manner that bypasses the money -bill procedure. The
litigation was manifestly not frivolous or vexatious. It raised complex and novel
questions of constitutional law on which there was no direct precedent.
Although the Minister and SARS were justified, perhaps even duty -bound, to
respond to the challenge, upon careful reflection we have concluded that the DA
is entitled to its costs.
Order
[102] In the result, the following order is made:
1. It is declared that section 7(4) of the Value -Added Tax Act 89 of 1991
is inconsistent with the Constitution of the Republic of South Africa, 1 996
(the Constitution), and invalid.
2. The declaration of invalidity in paragraph 1 of this order is
suspended for a period of twenty four (24) months from the date of this
order to afford Parliament an opportunity to correct the defect.
3. In terms of section 172(2)(a) of the Constitution, the declaration of
invalidity in paragraph 1 is referred for confirmation or otherwise by the
Constitutional Court.
4. The applicant’s application for a declaratory order in respect of the
first respondent's announcement of 12 March 2025 is dismissed.
5. The first and second respondents shall pay the applicant’s costs,
jointly and severally, the one paying the other to be absolved, on Scale C
(party and party) and including the costs of two counsel where so
employed.
6. The Registrar is directed to transmit the record of these proceedings,
including this judgment, to the Registrar of the Constitutional Court within
10 court days of the date of this order.
_____________________
M FRANCIS
Judge of the High Court, Cape Town
I agree
_____________________
J I CLOETE
Judge of the High Court, Cape Town
I agree
_____________________
J LEKHULENI
Judge of the High Court, Cape Town
APPEARANCES:
Counsel for Applicant
Attorneys
Counsel for 1st Respondent
Attorneys
Counsel for 2nd Respondent
Attorneys
ADV NGWAKO MAENETJE SC
ADV MICHAEL BISHOP
ADV MICHAEL MBIKIWA
Minde Schapiro & Smith Inc
ADV KAMESHNI PILLAY SC
ADV MICHAEL DAFEL
The State Attorney , Pretoria
ADV WIM TRENGOVE SC
ADV GILBERT MARCUS SC
ADV MICHELLE O’SULLIVAN SC
ADV NELSIE SIBOZA
Mulangaphuma Inc t/a DM5 Incorporated