Cape Town – Give us VAT-free chicken, sanitary towels and meat in general, was the clear call from Fin24 users taking part in an informal survey ahead of the 1% VAT increase kicking in.
It was announced in Budget 2018 that VAT will increase from 14% to 15% on 1 April. Only 19 items – all of them food stuffs – will be exempt.
Charles de Wet, a partner and director at PwC, recently told Fin24 the upcoming VAT increase raises the issue of the potential impact on South African consumers, especially on the poor. He pointed out that poor households require more than just the 19 listed VAT-free items to survive.
Early in March, Finance Minister Nhlanhla Nene said government will continue to hold talks with stakeholders in a bid to soften the blow for the poor from the impact of the VAT increase and even looking at possibly expanding the list of zero-rated goods.
Fin24 asked its users to share their views on the VAT increase and which items they would like to be added to the current VAT-free list. A large number of users responded. Taking a closer look at their feedback showed that chicken tops the VAT-free add-on wish list, followed by sanitary towels and then meat in general, including “offal” (tripe).
Fin24 user Elmarie wrote on behalf of her neighbour who had the following message: “Do we as poor people have to live on the 19 VAT-free items alone? Are we not entitled to also have other items? Look at the price of frozen veggies. We cannot afford to buy fresh all the time, but the frozen veggies have gotten so expensive that it is impossible to buy it anymore. Even tinned veggies have gotten expensive.”
“Why not make a questionnaire to ask the people themselves what they eat and really need. Have it at the shops to fill in or even at Sassa offices. Why do wealthy people have the right to eat things they love, but we as poor people get a list of 19 things to buy. What do we have to put on our school and work sandwiches?”
Fin24 user Pranesh, who also thinks consumers need to be surveyed more, writes: The VAT-free list is completely derogatory to a poor family. A lot more work needs to be done to see how the poor live. How about asking the average low-income earner who is taking care of a family of five by herself?
Fin24 user Nadine writes: Most people are struggling in South Africa, not just the poor. They can barely have enough for anything as tax goes up. Everything goes up except the salary.
Fin24 user Rosa writes: Give poor people food that don’t need much preparation. Water and electricity are expensive, often they don’t have access to it either.
Fin24 user Johan writes: The poor, pensioners and people having nothing will suffer the most. Why couldn’t stuff like top of the range TVs, fancy electronic cell phones, liquor and cigarettes have been VAT-levied even at 16% and the poor be exempted from a larger list?
Fin24 user Julio agrees: Scrap VAT altogether on food items and increase VAT on luxury goods like cars over R400 000.
Fin24 user Christle writes: “Does government realise that people buy bare bones and fat at a butchery to cook with samp and pap to add some flavour and potency? VAT has to be charged on these items by butchers!”
A number of pensioners responded to say they are concerned about the impact of the VAT increase on their spending power.
Fin24 user Valerie writes: “As a pensioner with a small pension I don’t think it fair to ask the people who have not been the reason for the VAT increase to be forced into this shocking increase”.
Fin24 user Faiza writes that she is a pensioner with R1 690 per month. She would like to see items like electricity, water rates, white bread, chicken, cheese, fish and coffee to be added to the VAT-free list.
Fin24 user Alan proposes that locally produced products get a boost by making locally produced fresh and frozen meat (including chicken), fish, bottled water and margarine VAT-free.
Fin24 user Mukesh suggests that all VAT-free foods get mentioned on the product or price label or on the shelf so that they can easily be identified.
The Fin24 user VAT-free wish list:
- First: chicken (fresh and frozen) – Fin24 user Abdool writes: I believe VAT on chicken and meat should be zero or at least less than 15%. Of the 19 items no animal products are exempt from VAT. It is difficult for the poor to buy meat and chicken. Chicken and meat prices have rocketed in the last couple of years. They need to consume meat and chicken sometimes.
- Second: Meat – therefore including chicken and “cheap cuts; red meat; processed meat; pork; polony; corned beef; mince; brisket; boerewors and ‘offal’ (tripe) including liver, feet, heart, necks, mala mogodu” – users write.
- Third: Dairy (butter; dairy products which are not blends; basic cheese; yogurt; Inkomazi)
- Fourth: bread (brown bread already VAT free) 8 (low GI bread, white bread, raw bread dough) – Fin24 user M. Robberts writes: Thanks for this forum to air suggestions. Buying groceries for diabetic reasons is already expensive as most foods prescribed for diabetes are more expensive than the regular product. Although brown bread is VAT-free, I am under the impression that low GI whole wheat bread is VAT-taxable. As this is the type of bread recommended by dieticians for diabetic consumption is already more expensive than a regular loaf of brown bread, apparently it will also be VAT-taxed.
- Water (including bottled water)
- Fish (including hake – fresh or frozen)
- Margarine spreads
- Peanut butter
- Tinned beans (including baked beans)
- Canned food
- Basic jam
- Achaar – Fin24 user Haroon says about 70 000 tonnes of green mangoes go into achaar annually and about 98% of the ingredients is zero rated already anyway, like mangoes – being a fruit – and vegetable oil.
- Salt – Fin24 user Vilakazi writes: I like the idea of VAT-free chicken, because it is one of the foods mostly consumed by the poor, but I cannot image cooking chicken without salt or tomato gravy without Royco/Knorrs soup.
- Cooking oil
- Vegan dairy meat and eggs “alternatives”
- Grain food products (not blends)
- Soya products
- Raw oats
- Sorghum (Maltabella)
- Pastas like spaghetti and macaroni
- Frozen veggies
- Instant soup sachets and soup powder
- Sandwich spreads (Melrose, fish paste)
- Cooked food from supermarkets
- Sanitary towels top the list (including tampons) – Fin24 user Lynne writes: So many poverty stricken girls don’t go to school because they can’t afford sanitary towels, let alone with VAT.
- Soap comes in second (one user wants body wash)
- Toiletries in general
- Toothpaste (“even if just the popular ones” writes one user)
- Electricity tops the list
- Gas came in second (one user also wants gas stoves to be VAT free)
- Paraffin (including illuminating paraffin)
- Ethanol fuel gel – (“a safe, smoke free fuel source, used by low income households in cooking stoves” writes a user)
- Fuel tops the list, including petrol, diesel
- All forms of transport – public and private and including the Gautrain
- Toll gates
Rates and taxes
- Rates (municipal services) tops the list – Fin24 user Desiree writes: The entire time one only hears about VAT and food prices when other commodities are going to rise with the VAT increase.
- Property rates
- Medicine tops the list – (all over the counter medicines; cough medicine; aspirin; Paracetamol) – Fin24 user Marie writes: Basic medication like for colds and coughs should be VAT-free too, since not all clinics cover these.
- Savlon or Dettol
- Chronic medication prescribed by a doctor, wishes Fin24 user Corrie and writes: Can I suggest that chronic medication prescribed by a doctor can be VAT free. Not only does the medical aid pay less than what we are charged by chemists, but on top of that we have to pay VAT. It’s a monthly necessity to stay alive, not that we love buying these expensive medications.
- School clothes tops the list
- All clothing asks Fin24 user M. Reshoketswe, who wants to know if government thinks the poor do not also need these items?
- Sport clothes
- Protective clothing
- Washing powder tops the list
- Toilet paper comes in second
- Dish washing liquid
- Disinfectant like Jik
- Stationery tops the list, especially those used by school children
- Books come in second – especially school books and text books
- Baby essentials
- School fees
- Printing – photocopier/printer paper; black photocopier/printer cartridges (inkjet and laser), but not colour ones
- Building materials including cement and bricks
- Pet food – Fin24 user Nadine writes: Animal feed – people need animals to survive emotionally
Mar 31 2018 11:00 Carin Smith