The chicken products from which VAT should be removed have been carefully selected to have the most benefit for South Africa’s poorer households.
The products are frozen bone-in chicken, from whole frozen chicken to portions such as leg quarters, drumsticks and wings, and fresh and frozen chicken offal, which includes chicken livers, heads and feet.
These are the products most consumed by low-income households, and making them VAT exempt would bring targeted relief to the poor, the submission says. Cooked chicken from shops and restaurants, and value-added products such as crumbed, spiced or marinated chicken are excluded because they are bought mainly by higher-income shoppers.
Tinned cooked chicken is excluded, while uncooked tinned chicken livers would qualify for the proposed VAT exemption. This is because chicken livers are relied upon by poor households, and are used in child feeding schemes.
While wealthy consumers would also benefit from the VAT exemptions, “poorer households gain more from zero-rating in relative terms based on their needs”.
Data from one of South Africa’s major retail groups showed that frozen chicken was bought overwhelmingly by poorer consumers. Only 0.1% of the super-upmarket and 2.1% of upmarket consumers buy frozen chicken products, the submission stated.
While a letter accompanying the submission states that consideration could be given to including fresh chicken in the VAT-free list, the proposal itself focuses on frozen chicken products and offal and specifically excludes fresh chicken.
