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Mozambique: VAT exemption lowers cost of sugar, oil, soap ‘a bit’
4:06 CAT | 03 Oct 2022
File photo: Lusa
The price “went down a little” is the expression of Mozambicans describing the effect of the VAT exemption on sugar, oil and soap, as part of the relief from the impact of the pandemic, and now justified with “war inflation”.
Biology teacher Luísa Muthemba is not impressed with the new price of a kilo of sugar, because “it has hardly gone down at all, it has gone down a little”.
“It cost me 80 meticais [1.28 euros], but a month ago I bought it for 85 meticais [1.36 euros] and in other shops it was 90 meticais [1.44 euros]. It is a minimal reduction,” Luísa Muthemba told Lusa on Friday, about the price of sugar, carrying bags of groceries.
About cooking oil, she shakes her head before saying that “something has improved”, because she has just bought the five litre bottle for 750 meticais (12 euros), while she used to buy the same amount for more than 800 meticais (12.83 euros).
“I can make more fried food at home and not only live on stews, because I feel that the oil has gone down, but it’s not much”, she stressed.
Belartina Massango, an administrative worker at the health ministry, also feels a slight reduction in the prices of sugar, oil and soap, but inflation of the other products in the basket, imported from South Africa, “stifles everything”.
“You can see that some products have gone down a little, you save 10 to 20 meticais [0.16 to 0.32 euros] per kilo or litre, but the products that come from South Africa which are not produced in Mozambique are more expensive,” she explained, as she left a shop in the capital.
And it is these complications that men do not understand, because “they do not shop”, she said, alluding to the tradition in Mozambique that the task of going to the market is seen as a woman’s job.
Ugome Nhassengo, who sells food products in a container converted into a grocery store in downtown Maputo, said that cooking oil produced in Mozambique had fallen by over 100 meticais in recent months, with the impact of VAT exemption.
“I used to sell five litres of oil for 850 meticais [13.6 euros], but, as you see, it is now 720 [11.55 euros], it is a reduction,” he said.
A box of 20 bars of soap now sells for 350 meticais [5.61 euros], but once cost 420 meticais [6.7 euros], he explained.
But the high cost of the products he imports from South Africa into his container cancels out the effect of the reduction in prices of goods produced in Maputo.
“For example, onions, broth and mayonnaise are expensive,” he noted.
Micaela Guiole, who buys some products downtown to sell in her backyard in the suburbs of Maputo, made another reading: the VAT exemptions do not offset the increases that had been registered.
“The fall in some prices comes after big rises and one does not feel that prices are changing for the better,” Guiole noted.
“Anyone who says they are taking more products home now, I think they are lying,” she noted.
In an analysis consulted by Lusa, the CTA – Confederation of Economic Associations of Mozambique, the country’s largest employers’ association, advocated a special VAT regime for sugar, cooking oil and soap, taking into account the rising costs of these products.
The conclusion is the result of “monitoring” that the confederation has carried out to assess the impact of the current exemption.
CTA noted that, to be more efficient for consumers, the tax benefit should have an impact on the entire economic circuit of the goods covered, and also on the costs of importing raw materials.
Year-on-year inflation in Mozambique was 12.1 percent in August, the highest figure for the last four years and 11 months, the National Statistics Institute (INE) announced.
The food, non-alcoholic beverages and transport sectors have contributed most to the rise in prices in Mozambique.
The Mozambican authorities have pointed to the combined impact of the Covid-19 pandemic, natural disasters, armed conflict in Cabo Delgado and the Russian invasion of Ukraine as factors behind the upward spiral in prices in recent months.
Mozambique: CTA calls for special VAT regime for sugar, cooking oil, soap
Source: Lusa
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