Brakes on tax grab

The Constitutional Court recently delivered a judgment that reaffirms the constitutional principle that only the legislature, not the executive, has the power to impose taxes. The court ordered the North West provincial government to refund millions of rand to casino operators such as Sun International and Peermont, which had paid gambling levies under protest since 2022 when North West MEC of economic development Kenetswe Mosenogi announced the hike.

The court found that Mosenogi had no authority to impose a tax on the industry, which is regulated by the national government. It also found that the levies were not regulatory charges, but revenue-generating charges, whose purpose was to raise funds for the province. The court declared the legislation that empowered the MEC, the North West Gambling Act, unconstitutional.

The ruling is a boost for the gambling industry, struggling to recover from pandemic-related restrictions and facing the prospect of a ban on indoor smoking in casinos. Studies link smoking and gambling and a ban may deter customers.

The ruling is also a victory for the rule of law and fiscal discipline. It sends a clear message to provinces that they cannot use their regulatory powers to raise revenue for their own coffers without the approval of parliament. It also protects taxpayers from arbitrary and excessive taxation, which could undermine economic recovery and growth.