Plea for zero VAT rating on chicken
VAT panel recommends zero-rating be extended to white bread, nappies, sanitary towels and school uniforms
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that was implemented in April, and said overall Cosatu believed the panel should have called for the VAT hike to be rescinded.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. |