The South African poultry industry is confident that VAT-free chicken would benefit low income households rather than affluent consumers, and believes the savings will be passed on by producers and retailers.
These assurances came from Izaak Breitenbach of the SA Poultry Association (SAPA), which is finalising its application to have the 15% value added tax (VAT) removed from some chicken products.
He told Farmer’s Weekly that the VAT exemption would aid food security, as it would make chicken more affordable for low-income groups, resulting in a meaningful increase in consumption.
“We are not asking for chicken cuts consumed by higher-income groups to be exempt – only bone-in frozen chicken and secondary products like livers and hearts,” he said.
Breitenbach said concerns that led to the proposal being turned down in 2018 had been addressed this time around. This included a definition of the exempt products that would not cause ambiguity.
“The concern then was also that it would reduce income for the fiscus. While this will still be the case, the fact that only certain cuts will be exempt will make the impact smaller.”
Whether retailers will respond to the VAT exemption by passing discounts onto consumers remains to be seen, but Breitenbach said he was confident that consumers would reap the benefits.
“Chicken is very price sensitive, with retailers all vying for consumer attention. We believe the full 15% reduction will be passed on to consumers,” he said.
SAPA believed that the VAT exemption would also increase demand for these chicken products, which boded well for chicken farmers and others in this value chain.
The Treasury is expected to make a decision on SAPA’s request by February 2025, Farmer’s Weekly reported.
