South Africa’s May budget delivered a double blow to the poor on food prices, FairPlay said in a statement.
FairPlay founder Francois Baird said the poor would suffer because the third budget speech this year no longer exempted additional food items from value added tax (VAT). These additions were proposed in two earlier budget proposals, which were based on VAT increases and were rejected by parliament.
“And secondly, while there is no VAT increase this time, prices will go up in another way because of the increased fuel levies on petrol and diesel.
“Higher fuel prices will raise the cost of everything – poor people will not only find food more expensive, but they will have less to spend on food because other costs have gone up,” Baird said.
The budget is not good news for the millions of poor South Africans who go to bed hungry at night. South Africa is food secure at national level, but not at household level. Statistics SA reported last year that hunger was increasing and a fifth of South African households now suffered a degree of food insecurity.
Since VAT was last increased in 2018, FairPlay has campaigned for “VAT-free chicken” – the exemption from VAT of the chicken portions most consumed by low-income households. Chicken is the country’s most popular and most affordable meat protein, and is an essential component of the diets of poor people.
“Since 2018 the situation has grown steadily worse, with rising food prices, increased unemployment and rising poverty and hunger all reflected in official statistics,” Baird said.
The Human Sciences Research Council (HSRC) had estimated that the rate of stunting in children under the age of five is up to nearly 30%. Stunting results from chronic malnutrition and affects these children both physically and mentally for the rest of their lives.
“It is a shocking and shameful statistic in a country that produces plenty of food but where millions cannot afford a healthy diet,” Baird stated.
“With hunger levels rising, Vat-free chicken should not be a budgetary option – it has become essential and will be ever-more urgent in the years ahead unless it is included in a revised financial package.
“The first two budget proposals would have added chicken offal to the Vat-free basket. That should be returned, together with the bone-in portions such as chicken leg quarters, thighs and drumsticks which provide the meat proteins so desperately needed by poor families and their children.”
Removing these chicken portions from a proposed new VAT-free list was “a dreadful mistake,” Baird said. “There is still time to put it right.”
Following the budget announcement, there has been speculation that the VAT increase might return next year if government revenue remains under pressure. If that happens, hunger levels are likely to rise again.
