The Star Early Edition

Ex­emp­tion for whole­wheat bread to fall away

- Luy­olo Mken­tane @luy­olomken­tane

SOUTH AFRICA, which presently is bat­tling a tax rev­enue short­fall of a whop­ping R50.8 billion, looks set to charge a puni­tive 14 per­cent value-added tax (VAT) on whole-wheat brown bread when the Tax­a­tion Laws Amend­ment Bill 2017 comes into ef­fect next year.

Cer­tain cat­e­gories of brown bread, a rich source of car­bo­hy­drates for many, which in­cludes whole-wheat brown bread, high fi­bre brown bread, high pro­tein brown bread and brown health bread, cur­rently qual­ify as zero-rated items.

This means that con­sumers are not charged VAT, which was in­tro­duced 26 years ago and re­placed GST (gen­eral sales tax).

When the puni­tive tax was in­tro­duced in 1991, brown bread was ex­empted from it, but that could soon be a thing of the past when the bill is pro­mul­gated in 2018.

It re­port­edly pro­posed a cor­rec­tion to the VAT6 Act to de­fine brown bread in terms of the up­dated bread reg­u­la­tions pub­lished ear­lier this year, which amend the def­i­ni­tion of brown bread and in­cludes var­i­ous sub­classes of brown bread un­der the class “brown wheat bread”.

Agri­cul­tural busi­ness cham­ber chief ex­ec­u­tive Dr John Pur­chase said: “The move from zero rated VAT whole wheat brown bread (not brown bread as such) to 14 per­cent stan­dard VAT rat­ing was ex­pected.

“(It) will have only a mar­ginal ef­fect on the in­dus­try as whole wheat brown bread only makes up roughly 1.5 per­cent of to­tal bread sales.”

Health prod­uct

He said whole wheat brown bread was to­day a niche health prod­uct and not a main­stream consumer prod­uct.

“So it will im­pact on that seg­ment of the consumer pro­file that reg­u­larly pur­chase whole wheat brown bread, and they will thus be pay­ing ap­prox­i­mately 14 per­cent more for their prod­uct of pref­er­ence,” said Pur­chase.

Food and Al­lied Work­ers’ Union gen­eral sec­re­tary Katishi Masemola said they had cam­paigned 10 years ago for brown bread to be ex­empted from VAT. “We think the gov­ern­ment wants to equalise the tax­a­tion bas­ket of wheat prod­ucts, but we don’t think bread should be taxed in gen­eral.”

Masemola said the ef­fects of the leg­is­la­tion would cer­tainly be more on the con­sumers than the work­ers.

“Even if the price of bread were to rise, peo­ple still have to con­sume bread, so in that sense, em­ploy­ment lev­els are likely to re­main the same, but con­sumers will have to fork out more money to buy bread.”

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