Zero-rating VAT plan could cost R4bn
A South African panel has recommended six more consumer items be added to a list of goods that won’t incur value-added tax (VAT), which could potentially cost the government R4 billion.
White bread, white flour, cake flour, sanitary products, school uniforms, and diapers should all be zero-rated, according to a re- port by a panel of experts released by the National Treasury.
That would provide tax relief of R2.8 billion for the poorest households, they said.
In February, former finance minister Malusi Gigaba announced a one percentage-point increase in the VAT rate to 15% – the first advance in 25 years – to try to help plug a revenue shortfall of almost R50 billion.
Currently 19 food items including brown bread and eggs carry no VAT, while paraffin also doesn’t incur the tax. Zero-rating chicken, an important source of animal protein for many, would have cost R2.1 billion in foregone revenue, the panel said. – Bloomberg