SA – After vocal protests against VAT hike, more foods could be zero-rated to help poor

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SA – After vocal protests against VAT hike, more foods could be zero-rated to help poor

4:39 CAT | 01 Mar 2018

The Cabinet is considering expanding the list of zero-rated foodstuffs under value-added tax (VAT) in order to mitigate the effect on the poor of the one percentage point increase in the VAT rate, announced in the budget.

Communications Minister Nomvula Mokonyane made the announcement at a post-Cabinet media briefing on Thursday.

There has been an outcry of opposition by trade unions and nongovernmental organisations over the increase in the VAT rate from 14% to 15%, which was announced in the 2018-19 budget last week. The increase is due to come into effect on April 1.

Currently 19 basic food items are excluded from VAT but researchers point out that the food basket of the poor comprises a large number of items that are subject to VAT.

Mokonyane said a team of ministers led by Finance Minister Nhlanhla Nene would look into the possible expansion of the list of zero-rated goods. Consultations would be held with civil society. She said no timeframe had been set for those deliberations.

Source: Business Live