South Africa’s poor and hungry would suffer from the government’s continued refusal to remove value added tax (VAT) from chicken, FairPlay founder Francois Baird said in a statement.
Reacting to the budget speech by Finance Minister Enoch Godongwana, Baird said the budget was an opportunity lost to address widespread malnutrition in South Africa.
“It is a shameful decision, because poor people will suffer, and malnourished children will suffer the most.”
The government had repeated this error every year since 2018, when VAT was raised to 15% and FairPlay launched its campaign for “VAT-free chicken” – the removal of VAT from the chicken portions most consumed by low-income households.
It had done so again in this year’s budget, despite a sizeable revenue increase which could have funded the initiative.
“Chicken is the main source of meat protein for poor families but, since 2018, they have had to pay an extra 15% on every portion of chicken purchased. Since 2018, the need for VAT-free chicken has become more urgent every year, as poverty and hunger spread,” Baird said.
“This is an opportunity missed to address hunger, malnutrition and the high level of child stunting highlighted by President Cyril Ramaphosa earlier this month. Stunting results from chronic malnutrition and affects more than a quarter of South Africa’s children.”
VAT-free chicken was a targeted intervention which would immediately lower the price of the chicken bought by poor families. The government had opted instead to relieve poverty through social grants.
“While grant money goes directly to poor families, it does not go directly to food. More specifically, it does not go directly to nutritious high-protein foods like chicken.
“VAT-free chicken is a pro-poor initiative, because it targets the offal and frozen chicken products on which poor families rely for their meat protein. Wealthier families prefer fresh, value-added or deboned chicken, which would continue to be subject to VAT.
“Grant money is general income, and will be spent on a variety of household needs and preferences. About 50% of it will go on food, but families also have to pay rent and for transport, clothing and other necessities. A portion may go on alcohol and airtime for mobile phones.
“Debt repayment is an increasing burden for stressed families, and a new concern is the amount of money spent on online gambling.
“Welcome as the grant funding is, it is nowhere near an answer for the hunger and malnutrition suffered by millions of South African families,” Baird said.
VAT-free chicken would have been affordable – only a tiny fraction of projected revenue would be lost – and it was administratively simple, which grant funding was not.
“Grants can take time to approve and implement, and there have been reports of fraud in government grant programmes. VAT-free chicken can be implemented immediately, and government and retail price surveys will monitor its effectiveness and prevent exploitation.”
Baird said VAT-free chicken would have immediate and longer-term benefits for the country.
“Healthier families, and in particular healthier children, are a benefit in themselves. There are additional, long-term benefits for the country as a whole. A healthier workforce will earn more money, contributing to economic development in poor rural areas, and increasing tax revenue for the state.
“Vat-free chicken is desperately needed. The government should reconsider its refusal to opt for this direct way to address hunger and malnourishment.
“FairPlay will not give up. We will repeat these arguments, with vigour and backed up by facts, ahead of the medium-term budget later this year,” Baird stated.
