Poor people are going to be the hardest hit by the South African government’s decision to scrap the proposed additional food exemptions from value added tax (VAT), FairPlay said in a statement.
Because VAT is no longer going to increase from 15% to 15.5%, the government has cancelled plans to extend the list of essential foods free of the tax.
FairPlay founder Francois Baird welcomed the news that VAT would not go up, but said “forcing poor people to pay more for food is a shocking way for the government to try to make up for the revenue it will lose by not increasing VAT.”.
The government had received multiple suggestions from economists and political parties on how the government could cut its spending without increasing VAT.
“Not one of them suggested that the cuts should target millions of poor and hungry South Africans.”
In earlier budget proposals, the government has planned to cushion VAT hikes by exempting more essential foods, including some tinned vegetables and some meat products, such as chicken offal. With the VAT increase off the table, those concessions have been withdrawn, the Treasury said in a statement.
This was the wrong decision when millions of South Africans could not afford a healthy diet, Baird stated. The need had become ever more urgent in the years since the VAT-exempt basket was last increased in 2018.
Then, and now, that list should have included “VAT-free chicken” – the frozen chicken portions on which low-income households rely as their primary source of meat protein. Every year since 2018, poor people have had to pay an additional 15% for every chicken portion purchased.
“Official statistics show that poverty, hunger and unemployment have increased steadily since 2018, with rising totals of hungry families and malnourished children. The Human Sciences Research Council (HSRC) reported last year that nearly 30% of South African children under the age of five are stunted.
“Stunting, caused by chronic malnutrition, affects these children both physically and mentally for the rest of their lives.”
Last year, FairPlay had supported the application by poultry producers and chicken importers for the removal of VAT from frozen chicken portions and fresh and frozen offal products such as chicken heads, feet and livers.
“This was a pro-poor proposal aimed at helping poor people feed themselves and their families.”
In response, the government had announced plans to add a number of essential foods to the VAT free basket, including offal but not the badly needed relief on chicken portions.
“Now that there is to be no VAT increase, there is also to be no extra VAT relief on anything. This is an appalling decision at a time when millions go hungry every night. The government should find other ways of saving, instead of targeting the poor.
“FairPlay hopes there will be a rethink. There are weeks of debate to come before the national budget is finalised. It is time to put poor people first, not make them suffer more,” Baird said.
