VAT re­lief for house­holds

Vuk'uzenzele - - General -

With the cost of liv­ing be­com­ing more ex­pen­sive gov­ern­ment is work­ing hard to re­duce the fi­nan­cial bur­dens placed on or­di­nary South Africans by zero rat­ing of some con­sumer items.

Zero rat­ing was in­tro­duced to pro­vide re­lief to low-in­come house­holds, which spend a high pro­por­tion of their in­come on house­hold goods.

Zero rated items do not have the 15 per­cent Value-Added Tax (VAT) at­tached to them. They are in­tended to help South Africans save money.

There are 19 ba­sic foods that do not have VAT at­tached to them in­clud­ing maize, samp, rice, brown bread, fruit, veg­eta­bles, pilchards and eggs. Ad­di­tion­ally, items such as diesel, petrol and paraf­fin, as well as cer­tain ser­vices in­clud­ing rental ac­com­mo­da­tion, rail and road trans­port and ed­u­ca­tional ser­vices, are also ex­empt from VAT.

In Fe­bru­ary gov­ern­ment an­nounced that it would in­crease VAT from 14 per­cent to 15 per­cent. Gov­ern­ment also recog­nised that poorer house­holds would be placed un­der more fi­nan­cial pres­sure.

To ease the ris­ing cost of liv­ing Fi­nance Min­is­ter Nh­lanhla Nene ap­pointed a panel that would pro­duce rec­om­men­da­tions on which ad­di­tional house­hold items should also be zero rated. Fol­low­ing in­ten­sive re­search and pub­lic con­sul­ta­tions, the panel rec­om­mended that ad­di­tional items to be added to the list. These in­clude;

White bread

White flour

Cake flour San­i­tary prod­ucts

School uni­form

Nap­pies

The panel also en­cour­aged Na­tional Trea­sury to en­sure that all the ben­e­fits of zero rat­ing go to con­sumers rather than to pro­duc­ers.

The panel fur­ther rec­om­mended other ways to help poor house­holds for ex­am­ple by strength­en­ing gov­ern­ment pro­grammes such as nu­tri­tional sup­port, free pro­vi­sion of san­i­tary prod­ucts and so­cial grants as ar­eas where gov­ern­ment spend­ing could be in­creased.

Min­is­ter Nene said in his bud­get vote that gov­ern­ment would work to en­sure that the poor­est of the poor are not hard­est hit by the VAT rate.

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