Zero-rat­ing VAT plan could cost R4bn

The Citizen (KZN) - - BUSINESS -

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

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