With the majority of South Africans' pockets being hit hard, it's hoped the National Treasury will heed the advice of an expert panel on zero-rated VAT tax items.
When former finance minister Malusi Gigaba raised VAT by a percentage point in February, there was an outcry that the poor would be hit the hardest. The panel submitted the report to the National Treasury on Monday and its suggestions were made public on Friday afternoon on its website, after Minister of Finance Nhlanhla Nene granted the expert panel a one-week extension.
The panel has recommended that white bread, sanitary products, school uniforms and nappies be included among items the zero-rated VAT items. It had to assess the current list of zero-rated food items and consider additional zero-rated item, including measures to soften the impact of the VAT increase on poorer households.
Another issue which the panel fell strongly about was the provision of free sanitary products to the poor. A statement accompanying the final report said the zero-rating of school uniforms should be done if these can be separated from general clothing.
“For each of the recommended items, the panel suggests that National Treasury does further work to ensure that the benefits of zero-rating accrue to consumers and are not captured by producers,” the statement continued.
The report also highlighted programmes which would assist poorer households, such as the strengthening of the National School Nutrition Programme and increasing child support grant provisions and old-age pensions.
“Taking the recommendations and the public comments, as well as the evaluation of the recommendations by National Treasury and the SA Revenue Service, the minister of finance will then decide which of the panel’s recommendations to implement,” the statement said.
The National Treasury has given the general public until the end of August to make comments on the final report.