FairPlay movement said that the government should use the delay in announcing this year’s Budget to provide for the inclusion of VAT-free chicken in next month’s revised Budget proposals.
Francois Baird, founder of the FairPlay movement, said that the Budget speech has been cancelled, for the first time in South Africa’s history, after a Cabinet meeting which could not agree on a proposed 2% increase in the rate of value added tax (VAT). “The removal of VAT on chicken stands on its own merits and independently of any horse trading around proposed tax increases. It should have happened in 2018, and it should happen now. Removing it as a trade-off for a higher tax burden on poor people and stunted children is self-defeating.”
Baird added that VAT, whether it is increased or not, adds to the burden of millions of poor South Africans struggling to feed themselves and their families. “One effect of this is that South Africa has an increasing rate of child stunting because they don’t have access to animal protein. Over 28% of children under five are stunted, and they should not be further punished by VAT on poultry. Chicken is the country’s most popular and most affordable meat protein and has been an essential part of the diet of low-income households.”
Baird said that FairPlay believes that the current 15% VAT should be removed from the chicken portions most purchased by poor people. “A VAT increase would make the case for VAT-free chicken overwhelming poor people have been paying an extra 15% on every chicken portion since the VAT-free basket was last reviewed in 2018, and an increase would only make things worse.”
Baird added that if VAT is to be increased, chicken should be top of the list for VAT exemption. “That can be announced in the revised Budget. The government knows the arguments for VAT-free chicken and does not need to review them. A higher VAT rate should mean that the VAT exemption for essential chicken products is announced together with the increase.”
Baird said that if the delay means there will be no VAT increase and the government will have to find other sources of additional revenue, then the removal of VAT from chicken remains essential. “The need has increased since 2018. Millions more people have struggled to feed themselves and their children as unemployment has worsened and food prices have risen. At the current VAT rate of 15%, VAT-free chicken is a necessity for poor people. At 17%, the case for removing VAT from chicken becomes unanswerable.”
BUSINESS REPORT