Plea for zero VAT rat­ing on chicken

VAT panel rec­om­mends zero-rat­ing be ex­tended to white bread, nap­pies, san­i­tary tow­els and school uni­forms

The Mercury - - FRONT PAGE - African News Agency (ANA)

SUB­MIS­SIONS on the VAT panel’s re­port to Par­lia­ment yes­ter­day ranged from pleas to ex­empt chicken as a pro­tein sta­ple to im­pos­ing a spe­cial VAT of up to 20% on lux­ury goods.

The lat­ter pro­posal came from Cosatu, which said it was dis­ap­pointed that no con­ces­sions had been made to the poor on es­sen­tials, in­clud­ing wa­ter and elec­tric­ity.

Cosatu’s par­lia­men­tary rep­re­sen­ta­tive Matthew Parks told the stand­ing com­mit­tee on fi­nance there should be a “pro­gres­sive slid­ing VAT regime for wa­ter and elec­tric­ity for poor and work­ing-class house­holds” and that it viewed the panel’s fail­ure to pro­pose as much as a glar­ing omis­sion.

Parks also pleaded for a time limit, for ex­am­ple one year, to be im­posed on the 1 per­cent­age point hike in VAT, the coun­try’s first in 25 years, that was im­ple­mented in April, and said over­all Cosatu be­lieved the panel should have called for the VAT hike to be re­scinded. The in­crease to 15% was meant to bring the state an ex­tra R22.9 bil­lion in rev­enue.

But Parks said it was a re­gres­sive tax that made the poor pay for the loss of state rev­enue through cor­rup­tion.

“The real so­lu­tion to the bud­getary cri­sis is sim­ply to stop the loot­ing and wastage, and re­cover our stolen tax­pay­ers’ monies.”

Lobby group FairPlay’s Lionel Aden­dorf urged Par­lia­ment to pro­pose the in­clu­sion of chicken in the ze­rorated bas­ket. The VAT panel es­ti­mated that zero-rat­ing poul­try would re­sult in a tax break of about R6bn to the con­sumer. They could not reach con­sen­sus on the is­sue, in­stead de­fer­ring it to MPs.

Aden­dorf ar­gued that it was the pre­ferred form of pro­tein of the poor and an ex­emp­tion would help pre­vent mal­nu­tri­tion, quip­ping: “Don’t dis­crim­i­nate against chicken.”

The SA Poul­try As­so­ci­a­tion con­ceded there would be a cost to the state, but said it would boost an in­dus­try that al­ready em­ployed 130 000 peo­ple.

The as­so­ci­a­tion said in its sub­mis­sion that it was com­mit­ted to en­sur­ing that any VAT sav­ings as a re­sult of the zero-rat­ing of pri­mary chicken prod­ucts “are achieved in the sup­ply and are passed on to our con­sumers”.

It es­ti­mates that zero-rat­ing, and the re­sul­tant price drop, would lead to an in­crease in de­mand of 7.8%, which in turn would cre­ate about 11 000 jobs.

The com­mit­tee also heard a plea to zero-rate ba­sic medicines, say­ing if the poor couldn’t af­ford medicine they would skip clinic vis­its, lead­ing to more peo­ple with health com­pli­ca­tions, which would place a greater bur­den on the pub­lic health sec­tor.

The VAT panel rec­om­mended that the zero-rat­ing be ex­tended to white bread, flour, nap­pies, san­i­tary tow­els and school uni­forms.

The pub­lic com­ment pe­riod on the panel’s rec­om­men­da­tions closed at the end of last month.

Fi­nance Min­is­ter Nh­lanhla Nene will now have to take into ac­count the sub­mis­sions, as well as those of the Trea­sury team and the SA Rev­enue Ser­vice, be­fore de­cid­ing on which to im­ple­ment. |

NH­LANHLA NENE

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