South Africa’s “mini budget” this month gave supporters of VAT-free chicken some encouragement and some food for thought.
FairPlay has strongly supported the VAT-free chicken campaign, which aims to combat hunger and malnourishment by removing the 15% value added tax (VAT) from the chicken products most consumed by low-income households.
The good news came not in the budget speech, but in media briefing ahead of that event by the head of the African National Congress’s economic transformation subcommittee, Mmamoloko Kubayi, following an ANC national executive committee meeting.
After a statement by President Cyril Ramaphosa in July that the new government of national unity plans to increase the essential food items that are exempt from VAT, Kubayi confirmed that this is now ANC and government policy.
“Expanding the zero-rated VAT food basket is part of our bold step to alleviate inflation on basic food items, protecting both low-income and middle-class families,” BusinessTech reported her as saying.
There was, however, no direct reference to the inclusion of chicken, South Africa’s most popular and most affordable meat protein.
There was also no reference in the mini-budget to amending the VAT-free list. The mini-budget (actually the Medium Term Budget Policy Statement or MTBPS) is not that sort of occasion – it is a three-year outlook for the country’s financial policy framework.
However, Finance Minister Enoch Godongwana warned of tough times ahead, with tax revenues down and economic growth recovering slowly.
“In the absence of faster growth and in the face of external risks, tax revenue will remain under pressure, forcing us to make difficult decisions on where to spend. Lower revenue also means that we cannot, within the envelope, accommodate all of the demands on the fiscus,” he said.
The poultry industry’s proposal to be submitted to government later this month will explain why removing VAT from chicken is one of the difficult decisions that needs to be taken.
