VAT-free chicken needed to help poor consumers

An in-depth study by Discovery Bank and Visa has delivered further proof of what FairPlay has been saying for years – that poor households are hardest-hit by food price inflation and need government support.

The Spendtrend23 study of consumer spending, reported in this week’s Sunday Times, showed that, since the end of the Covid-19 lockdowns, affluent South Africans had increased their spending on restaurants, take-away food and travel, while poorer people found groceries were taking a hugely increased share of their disposable income.

For mass-market customers, classified as earning R100 000 per year or less, grocery costs as a proportion of income had increased by 47% since 2019, while for those earning R850 000 or more the increase was only 4%.

“You see the pronounced impact of items like brown bread, which is 80% more expensive at the end of 2022 versus 2019, and you can see the kind of pressure grocery inflation has on low income earners,” Discovery Bank CEO Hylton Kallner said of the research and analysis.

Constant power cuts have also prompted the affluent to eat out more, while the spending of poorer households is further limited by rising prices of key commodities.

“This is yet more evidence of the need for government to remove the 15% value added tax (VAT) from the chicken portions most consumed by poor households”, said FairPlay founder Francis Baird.

“Chicken has been an affordable staple for the poor, but is subject to price rises like other products affected by rising input costs. FairPlay has been campaigning for VAT-free chicken since 2018, but never has the need been more urgent.

“Government ministers take note: the time for VAT-free chicken is now,” Baird said.