VAT-free chicken is both necessary and affordable, according to Charles de Wet of law firm ENSAfrica.
De Wet countered the Treasury arguments, that VAT-free chicken would benefit rich people as well as poor, and that the loss of VAT revenue was too large.
The VAT-free chicken initiative is targeted at poor people, he said. It applies only to frozen bone-in chicken portions and fresh or frozen offal, products that are predominantly purchased by lower-income consumers.
Higher-income households tend to consume value-added and deboned chicken products, which would remain VAT-rated. This targeted approach limits leakage to wealthier consumers and ensures that the benefit is focused on those most in need.
De Wet stressed that zero-rating the targeted chicken products is financially feasible.
In the 2024/25 financial year, total tax revenue reached R1.86 trillion, with net VAT collections amounting to R457.8 billion. The estimated revenue foregone from zero-rating frozen bone-in chicken portions would be approximately R4.8 billion, while zero-rating chicken offal would cost an estimated R1 billion.
The combined cost of around R5.8 billion represents roughly 1.3% of net VAT collections and approximately 0.3% of total tax revenue. This limited fiscal impact comes in the context of strong revenue performance, with total tax collections increasing by 6.6% year-on-year.
From a longer-term perspective, improved access to affordable protein has implications for health outcomes, educational attainment, and productivity. All of these influence future economic growth and the tax base, De Wet said.
