No Taxation Without Representation

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No Taxation Without Representation

• 01 September 2026
• Tax Administration
• Paul Gering

The American Revolution drew force from the clarion call, ‘No taxation without representation’. Britain emerged from the Seven Years’ War with substantial debt and sought to raise more revenue from its American colonies. Measures including the Stamp Act, the Townshend duties and the Tea Act affected paper and legal documents, glass, tea and other goods. The Boston Tea Party followed in 1773, helping to intensify the conflict that led to the American Revolution.

In February 2025, Cabinet postponed the Budget Speech, originally scheduled for 19 February, amid disagreement within the Government of National Unity over spending and revenue proposals, including a reported proposal for a two-percentage-point increase in VAT. When the Minister tabled the Budget on 12 March 2025, he instead announced a phased one-percentage-point increase: from 15% to 15.5% on 1 May 2025, and then to 16% on 1 April 2026. Following sustained political and public opposition, both increases were withdrawn in the revised Budget tabled on 21 May 2025.

Legal battles followed in the Western Cape High Court. On 27 April 2025, the Court, by agreement between the parties, suspended the proposed increase. On 5 March 2026, the Court declared section 7(4) of the Value-Added Tax Act unconstitutional and invalid but suspended that declaration for 24 months and referred it to the Constitutional Court for confirmation. Unlike the American Revolution, the only casualty was the VAT hike.

One might have thought that the fight was over. The Minister appeared to have retreated to his barracks, and there was not even a whimper about a VAT increase in the 2026 Budget.

The battle lines nevertheless remain drawn in the Constitutional Court. At the heart of the matter is whether Parliament may confer on the Minister the power in section 7(4) to alter the VAT rate with immediate legal effect, subject only to later legislation. The Constitutional Court heard the confirmation proceedings on 27 August 2026 and reserved judgment.

Having listened to some of the argument, a significant part of the debate concerned whether the DA had properly pleaded all the grounds on which it sought to rely in the Western Cape High Court. But the underlying constitutional question is larger: what constitutes the power to tax, and where do the elected representatives in Parliament fit into the decision-making process?

There is grave concern that the greater picture risks being missed amid the legal noise.

Section 7(4) is one of several statutory mechanisms that permit tax or duty changes announced by the Minister to take effect before Parliament has passed final legislation. These mechanisms are not identical, and each must be assessed on its own wording. Under the Money Bills and Related Matters Act, Parliament must adopt or amend the fiscal framework within 16 days of the Budget being tabled, and it may decline to pass the later legislation.

The concern, however, is that section 7(4) contains no quantitative limit on the Minister’s power and no requirement for Parliament expressly to approve the altered VAT rate within a short period. Is that sufficient representation before taxation takes effect?

Ask a worker whose household costs rise because of a VAT increase. That person may well see a tax imposed by ministerial announcement before their elected representatives have voted on the rate change itself. The concern is particularly acute for VAT and certain customs and excise duties that can take effect from the date announced. Personal and corporate income-tax rates operate differently: they are ultimately fixed by Parliament through the annual Rates and Monetary Amounts and Amendment of Revenue Laws Act. Parliament therefore has legal mechanisms to resist a proposal, but section 7(4) permits the VAT alteration to operate in the meantime. In 2025, urgent court proceedings became the immediate means of preventing the announced increase from taking effect.

The Minister, National Treasury and SARS have defended the constitutionality of section 7(4). Their case is that the provision concerns the temporary adjustment of the rate of an existing tax, not the creation of a new tax, and that limited delegated rate-setting can serve sound fiscal administration. The difficulty is that, as presently worded, the provision gives the Minister a broad power with immediate consequences for ordinary South Africans.

A “middle-ground” solution is possible. Section 7(4), and any comparable provisions in other fiscal statutes, could preserve the Government’s ability to respond quickly while placing clear limits on the Minister’s authority and requiring prompt parliamentary approval. This would reduce the risk that members of Parliament must again turn to urgent litigation to prevent a disputed rate from operating.

The current wording of section 7(4) of the VAT Act reads as follows:

“If the Minister makes an announcement in the national annual budget contemplated in section 27(1) of the Public Finance Management Act, 1999 (Act No. 1 of 1999), that the VAT rate specified in this section is to be altered, that alteration will be effective from a date determined by the Minister in that announcement, and continues to apply for a period of 12 months from that date subject to Parliament passing legislation giving effect to that announcement within that period of 12 months.”

One may propose for a “middle-ground amendment” along the following lines:

“If the Minister makes an announcement in the national annual budget contemplated in section 27(1) of the Public Finance Management Act, 1999 (Act No. 1 of 1999), that the VAT rate specified in this section is to be altered, that alteration will be effective from a date determined by the Minister in that announcement and continues to apply from that date subject to Parliament adopting the fiscal framework based on that rate within 1 month and then continues to apply subject to Parliament passing legislation either giving effect to or rejecting the announcement within a period of 12 months.”

The argument advanced for the Minister—that the announcement merely changed the rate of an existing tax and did not introduce a new tax—becomes much harder to accept if tested at the extremes. Suppose the Minister had announced that VAT would rise to 20%. That rate of 20% currently exists in some African countries, but its impact in South Africa would be profound. People would rightly ask how such a consequential tax increase could take effect before their elected representatives had expressly approved it: no taxation without representation.

Britain sought revenue after a costly war; South Africa has had to address fiscal pressures shaped by weak growth, inefficiency, corruption and a heavy public-debt burden. The withdrawal of the 2025 VAT proposal showed that alternatives could be assembled through lower additional spending and stronger revenue collection. By the 2026 Budget, better-than-expected tax collections had further improved the outlook and allowed Government to withdraw the proposed R20 billion in tax increases that were announced in the 2025 Budget.

That is real progress, but it does not prove that the country faces no fiscal constraints or that public sentiment can be described as uniformly happy. The stronger conclusion is that Government must sustain revenue collection, eliminate wasteful expenditure and corruption, and subject major tax choices to effective parliamentary control.

One hopes that the Constitutional Court will look beyond the procedural dispute about the pleadings and provide clear guidance on the proper balance between fiscal agility and parliamentary supremacy. In a Parliament where no single party commands a majority, the Executive must build support for major tax decisions. Parliament’s constitutional role cannot be reduced to confirming an executive decision after it has already taken effect.

To paraphrase the Freedom Charter: no Minister of Finance can justly claim authority to increase the VAT rate unless that authority is based on the will of the people, expressed through their elected representatives.

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