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Consumers need VAT-free chicken

Minister Patel has got his decisions on anti-dumping duties and VAT-free chicken the wrong way round.

If he really wants to help consumers, he would be persuading his cabinet colleagues to lift the 15% value added tax on chicken portions, while adding to revenue collection by imposing the anti-dumping duties on Brazil and other countries which he has approved but suspended for a year.

Despite Minister Patel’s claim that he did not want to add to food price inflation, the anti-dumping duties would have had little or no impact on retail chicken prices. Removing VAT, on the other hand, would result in an immediate drop in the prices of the chicken portions most purchased by low-income households.

FairPlay has campaigned for VAT-free chicken since 2018, when the VAT rate was increased from 14% to 15%. It’s a pro-poor proposal that has become even more important now, with rising grain and food prices exacerbated by the war in Ukraine.

In 2018, FairPlay and the SA Poultry Association, supported by research and calculations from the consultancy PwC, told Parliament how VAT-free chicken would work, particularly for the lower-income households at which it is aimed.

Essentially, VAT would be removed from fresh or frozen whole chickens, and from fresh or frozen mixed chicken portions. PwC research showed that these are the chicken products most consumed by lower-income households, for whom it is the main source of meat protein.

To avoid too much lost revenue for the fiscus, VAT would continue to apply to cooked and value-added chicken (skinned, deboned, marinated etc), and to single portions, whether fresh or frozen, such as packs of thighs, breasts or wings. PwC says these chicken products are bought mostly by more affluent consumers.

The revenue loss would be further reduced by the imposition of the approved anti-dumping duties on Brazil (immediately) and the four European Union countries – Denmark, Ireland, Poland and Spain – whenever bird flu bans are lifted and they can once again export to South Africa.

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