The Democratic Alliance (DA) on Thursday expressed jubilation at Finance Minister Enoch Godongwana’s reversal of the value-added tax (VAT) increase, but questioned the sudden change.

On Wednesday, Godongwana wrote to the Speaker of the National Assembly Thoko Didiza, indicating that he will be withdrawing the Appropriation and Division of Revenue Bills.

Treasury said Godongwana expected to introduce a revised version of the Appropriation Bill and Division of Revenue Bill within the next few weeks.

The DA and the Economic Freedom Fighters (EFF) took Godongwana to court over the proposed 0.5% VAT hike, which would have come into effect on May 1, after which he presented both parties with out-of-court settlements.

Treasury says, without the VAT increase, estimated revenue will fall short by about R75-billion over the medium term.

DA Federal Council chairperson Helen Zille said she was taken by surprise when the DA’s lawyers on Wednesday said Godongwana’s lawyers proposed an out-of-court settlement.

“Why did it take me by surprise? Because less than a week before that, in [Godongwana’s] answering affidavit in our court case, the Minister of Finance made it absolutely clear that the VAT increase of 0.5% would go ahead on May 1, and that was merely a week ago, today,” she explained.

Zille further questioned what happened between April 17 and 23, noting that the DA’s challenge, which was heard in court on Tuesday, was pivotal because the party’s legal team made the case as to why the VAT increase should be interdicted and why the Minister had made the announcement in terms of an "unconstitutional power" allocated to him under the VAT Act.

Zille said the party’s legal arguments were clearly framed, and that its lawyers were confident that Godongwana’s legal team would have relayed to him that the VAT increase could be set aside by the court.

“…and in that context it seemed better for the Minister to concede before he was perceived to have been forced to by the outcome of the DA’s court challenge,” she said.

She also accused smaller parties of wanting to claim credit in having negotiated their way into getting its Government of National Unity partner, the African National Congress (ANC), to drop the VAT increase.

The Inkatha Freedom Party, ActionSA, Pan Africanist Congress, Rise Mzansi, BOSA, United Democratic Movement, Good Party, Al-Jamah and Patriotic Alliance all voted with the ANC to adopt the 2025 Fiscal Framework, with the 0.5% VAT increase.

Some of these parties argued that adopting the framework would end the Budget impasse while they negotiated with the ANC to scrap the VAT increase.

“That argument cannot hold water because a lot of negotiations happened with smaller parties before last Thursday, and yet last Thursday the Minister categorically said the VAT increase would go ahead and that there was no alternative to it,” Zille said.

The EFF argued that with the withdrawal of the Budget, the 2025 Fiscal Framework was redundant, anyway.

Zille said the DA’s court intervention was the “pivotal intervening factor” in the victory against the VAT hike, as well as its vote against the Fiscal Framework in Parliament earlier this month.

Zille said the DA would wait for a formal written settlement offer before responding to the Minister’s out-of-court settlement request.

She also confirmed that a meeting that was scheduled to take place with a high-level ANC delegation on Thursday has been cancelled. The meeting will now take place on Friday.