VAT FREE Chicken

Addressing Poverty and Inequality by Exempting Chicken from VAT

The Value Added Tax (VAT) is a commonly used revenue source in over 100 countries around the world. But this form of taxation is far from progressive. Many, if not most, countries recognize that the food budget in poor households is discretionary and therefore either exempt or provide for a reduced rate of VAT for basic foodstuffs.

In South Africa high rates of taxes render nutritious and quality food inaccessible to low-income households. Meat is zero–rated in India, Colombia, Argentina, Mexico, Ecuador, and Nigeria, to name a few. Over fifty countries around the world provide reduced rates or exemptions on meat. Exempting poultry meat from VAT is essential to South Africa’s food and nutritional security

A recent report by the Food and Agricultural Organization of the United Nations (FAO) reveals that South Africa has one of the highest rates of prevalence of undernourishment in the world. Further, the World Bank reports over 27 percent or more than 1.5 million South African children under the age of 5 are stunted. The prevalence of childhood stunting in South Africa is far higher than most of South Africa’s developing country partners.

The costs to the nation are staggering in terms of lost economic productivity. As a recent report by South Africa’s DG Murray Trust notes ”Poor nutrition is a symptom of the intractable problems of poverty and inequality. The cost of the interventions needed to tackle stunting would more than pay for themselves in increased productivity. As the World Bank has estimated, childhood stunting reduces an individual’s lifetime earnings by more than 10%. Zero stunting would mean that one million more of South Africa’s children would be able to thrive each year – and increase our GDP by approximately R80 billion.”

According to the FAO “Access to safe, nutritious and sufficient food must be framed as a human right with priority given to the most vulnerable. Policies that promote nutrition sensitive agriculture and food systems are needed in order to halt the intergenerational cycle of malnutrition.”

As South Africa’s Soul City Institute of Social Justice has noted: the Value Added Tax “impacts most negatively ordinary working people – black women and especially single black parents, in the main, women, worst of all” Taxes of essential food, like chicken, impact most negatively

In this context it is unconscionable that the Government of South Africa is dragging its feet on a VAT exemption for poultry meat, the most important and accessible dietary protein for low-income families. This is not a question of affordability for the government but rather a question of leadership and social responsibility.