Removing value added tax (VAT) from chicken would not only help feed millions of poor people, but it would have wider benefits for the national economy, according to Izaak Breitenbach of the SA Poultry Association (SAPA).
In a radio interview with Cape Talk, Breitenbach said there would be “a lot of positive outcomes” from removing the 15% tax on chicken.
The campaign for “VAT-free chicken” was aimed at the millions of poor people for whom it was an essential source of protein, he said. Lowering the price of chicken would enable many more poor people to buy chicken and get the protein they needed.
There would also be wider economic benefits.
“The total amount of chicken will increase. The total amount of jobs will increase and the total economic benefit to the country as a whole will increase.”
Asked about which chicken products the poultry industry thought should be exempted from VAT, Breitenbach said “at a minimum” the government should consider zero-rating offal products and bone-in chicken portions.
In 2018 a review panel had estimated that exempting offal and bone-in portions such as leg quarters would cost the fiscus about R2 billion. Exempting all chicken products now would result in a loss of R6bn in revenue.
Breitenbach said the loss to the fiscus could be offset by the income earned from duties on chicken imports.
Asked whether the 15% VAT reduction would be passed on to consumers, he said that would be up to retailers as they determined the selling price. However, given the intense competition between South Africa’s retail groups, he expected the benefits to reach the buying public.
He noted that poultry producers had managed to keep production prices down, despite the huge abnormal costs such as power cuts and bird flu that the industry had incurred in 2023.
“Since then, prices have come down so we are supplying cheap chicken to the masses,” he said.
He also expressed a preference for VAT exemption for local rather than imported chicken. “Ideally we would want to exempt a product that is produced in South Africa to stimulate production here, and not to exempt a product to stimulated imports where the money leaves the country,” Breitenbach said.
