The announcement by President Cyril Ramaphosa that the Government of National Unity (GNU) will look to expand the range of essential food items exempt from value-added tax (VAT) has been welcomed by all importers, none more so than the poultry industry.
The key, however, is the phrase “essential food items”, says FairPlay, which has been behind an ongoing lobby for the removal of VAT from chicken.
The advocacy group believes chicken is certainly an essential food in South Africa. “It not only makes up some 66% of the meat consumed in the country, but it is the main source of meat protein for millions of poor people and their families.”
Chicken failed to meet the exemption criteria in 2018 when the VAT-free basket was reviewed following the increase in VAT to 15%.
This was on the grounds that members of the review panel could not agree on the chicken products to be exempted and what the impact would be on producers and consumers.
What they did agree on, says FairPlay, was that chicken is the main staple protein for poor people.
The result of the panel’s failure to agree on how to exempt chicken from VAT has meant that, for the past six years, chicken has been 15% more expensive for poor households than it could have been.
For all of those six years, the call for VAT-free chicken has been a signature campaign for FairPlay, precisely because it is an essential food item for poor people.
The Competition Commission has noted an increase in the consumption of canned pilchards, nearly all of which is imported - but is free of VAT, while chicken products are not.
FairPlay supported the South African poultry industry’s 2018 application to have chicken zero-rated for VAT. “If there is another application this year, we will support them again.
“However, we hope that it is not only poultry producers who respond to what amounts to an invitation from President Ramaphosa to tell the government why specific food items should be exempt from VAT.”
