No April fools as SA reacts to VAT increase

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File: South Africa's economic recession could deepen unless there was policy certainty on mining and agriculture.

JOHANNESBURG – The recent VAT increase will take its toll on low-income households, which often use most of their money on consumable goods.

Unions and NGOs say the planned review of zero-rated goods is necessary to offset the financial burden of the increase.

There are 19 basic food items that are not affected by the VAT increase.

They include brown bread, milk powder, maize meal and vegetable oil.

READ: Independent panel to consider expanding VAT-free items

This list is meant to be a way of reducing the VAT burden on low-income consumers.

Matthew Parks from Cosatu Parliamentary Coordinator says, “It’s only 19 food items and often very very specific items.”

“So even the cooking oil, it’s a very specific type of cooking oil.”

“Now there’s a call to expand the list. Things like medicines, sanitary products for women and girls, toiletries and even chicken have been suggested."

Billions more could be lost depending on which other items are switched to zero-ratings.

READ: VAT increase: Government punishing the poor says Fedusa

The list has not been reviewed in 24 years, so Parliament along with the National Treasury are putting together a panel to do so.

Shaun Parsons, a UCT Taxation Professor, “It&39;s very difficult to put numbers to those kinds of things, that’s where the experts are going to be looking.”

 


“To try and quantify these things, trying to put real numbers on the table so we can understand what that trade-off is going to be."

 

The panel is expected to provide feedback on its research by the end of June.

Meanwhile, South Africans have taken to twitter to share their views on the official VAT increase that starts today on 1 April, in accordance with the budget speech.