VAT scrapped on essentials

Mboweni an­nounces zero-rat­ing on san­i­tary tow­els, cake flour and bread flour from April

The Star Late Edition - - METRO - BHEKI MBANJWA

THE poor will have a slight re­prieve from April next year fol­low­ing an an­nounce­ment by Fi­nance Min­is­ter Tito Mboweni to scrap Value Added Tax on es­sen­tial items, namely san­i­tary tow­els, cake flour and bread flour.

While this will re­sult in rev­enue loss es­ti­mated at R1.2 bil­lion, Mboweni said zero-rat­ing the prod­ucts “tar­gets the low-in­come house­holds and re­stores the dig­nity of our peo­ple”.

Mervyn Abra­hams, the pro­gramme co-or­di­na­tor of the Pi­eter­mar­itzburg Eco­nomic Jus­tice and Dig­nity Group, wel­comed the move, say­ing it would trans­late to sav­ings of about R10 per 10kg of cake flour and about R5 on a box of san­i­tary tow­els.

Mboweni con­ceded that the cur­rent eco­nomic cli­mate had hit the poor the hard­est.

“For or­di­nary South Africans it has be­come a dif­fi­cult time. Ad­min­is­tered prices, such as elec­tric­ity and fuel, have risen.

“Un­em­ploy­ment is un­ac­cept­ably high. Poor ser­vices and cor­rup­tion have hit the poor the hard­est,” he said.

While Abra­hams con­grat­u­lated Mboweni for zero-rat­ing the three items, he said the fi­nance min­is­ter should have gone fur­ther and im­ple­mented an­other rec­om­men­da­tion of the in­de­pen­dent panel on VAT, which was to in­crease so­cial grants.

Econ­o­mist Pro­fes­sor Bonke Du­misa said the zero rat­ing of the three items was not some­thing un­ex­pected as there had been talks about this.

Mboweni also an­nounced that the gov­ern­ment would en­sure that fe­male pupils had ac­cess to san­i­tary tow­els.

This pro­gramme has al­ready been rolled out in KwaZulu-Natal. “Funds will be added to the pro­vin­cial eq­ui­table share to en­able prov­inces to pro­gres­sively fur­ther this ob­jec­tive.”

Mean­while, the con­tro­ver­sial e-tolls are not go­ing any­where as Mboweni con­firmed the gov­ern­ment’s com­mit­ment to the user-pay prin­ci­ple. Mboweni said 75% of the non-toll road net­work was be­yond its de­sign life, adding that if the coun­try wanted a road in­fra­struc­ture that worked, the cul­ture of pay­ing for ser­vices would have to be re­stored.

This an­nounce­ment didn’t go down well with the Or­gan­i­sa­tion Un­do­ing Tax Abuse, which felt that the new fi­nance min­is­ter had missed the mark on e-tolls.

Mboweni fur­ther an­nounced that hous­ing sub­si­dies amount­ing to R1 bil­lion would be cen­tralised to help lowto-mid­dle-in­come house­hold ac­cess af­ford­able home loans which will re­sult in more South Africans ac­quir­ing their own homes.

Du­misa de­scribed the speech as not ex­cit­ing, say­ing the min­is­ter had merely re­hashed most of the things that had been said be­fore.

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