VAT FREE Chicken

FairPlay takes VAT-free chicken fight to Parliament

No consensus was reached on making chicken VAT-free and has effectively left the decision to Parliament.

CAPE TOWN – Chicken came out as the clear favourite to be VAT-exempted for the support of South Africa’s poor, when stakeholders presented their responses to the Woolard Panel of Expert’s report in Parliament today.

The overwhelming majority of organisations represented, which included FairPlay, Cosatu, the SA Poultry Association (Sapa), PWC, the Institute of Economic Justice and the SA Chamber of Banking called on MPs to vote for chicken to be added to the VAT-free basket.

FairPlay, which supports jobs and opposes dumping and predatory trade practices, has championed the cause of VAT-free chicken, and expressed its gratitude that the other stakeholders agreed today.

“We were heartened by the support, because we believe is it essential VAT should be removed on the chicken portions most consumed by low-income households,” said FairPlay spokesperson Lionel Adendorf.

Adendorf told the Standing Committee on Finance that the move was essential for poor people and affordable for the country.

He said that the nutritional benefits of chicken made it an essential component of a healthy diet, to address issues such as the prevalence of stunting in South African children due to malnutrition.

Stakeholder responses

The committee is considering stakeholder responses to the report of the Woolard panel, which recommended a number of additional items for inclusion on the list of goods that are exempt from VAT.

The panel could not reach a consensus on making chicken VAT-free, despite noting strong arguments in its favour, and has effectively left the decision to parliament.

FairPlay believes that zero-rating chicken would be a simple and effective mechanism to provide targeted relief for lower-income households. For these households, “chicken is not a luxury but a necessity,” the FairPlay submission stated.

“The benefits of VAT-free chicken, particularly for lower-income households, are overwhelming.

“It is South Africa’s most popular meat, it is nutritious and is the major protein source for poor people. VAT-free chicken will therefore bring immediate economic and nutritional benefits to the poor.”

As for the concerns about the cost of VAT-free chicken, FairPlay argued that a comprehensive revision of the current VAT-free basket will indicate where savings can be made to be able to afford chicken.

“There are outdated items in the basket, such as R1 billion worth of pilchards that are being imported, with no benefit to the fiscus,” said Adendorf. “The discussion in parliament should be about the best way to implement it and relieve the burden on those who suffer most from rising food prices.”

Combating malnutrition should be a national priority, and chicken is the highest-protein meat source per rand spent. Adding nutrient-rich food such as chicken to the VAT-free basked would bring relief to the poor and address the shocking statistics that show that 1.5 million children in South Africa suffer from often irreversible stunting.

FairPlay also urged consideration of the wider economic benefits of expanded chicken production which would follow reduced chicken prices. This could include 11 000 new jobs, R1 billion in tax revenue and an additional R3.7bn to gross domestic product.

“We can afford VAT-free chicken by fighting corruption and illicit trade that evades revenue collection,” FairPlay stated.