On 10 August the Finance Minister released the report by the Independent Panel on the review of the current list of items that are zero-rated for VAT purposes, on which comment is due by 31 August.
The Finance Minister appointed the panel after the announcement in the budget in February of an increase in the rate of value-added tax (VAT) from 14% to 15% effective from 01 April.
The panel submitted its report to the Finance Minister on 06 August, recommending that the following items also be zero-rated: (i) White bread, bread flour and cake flour; (ii) Sanitary products; (iii) School uniforms; and (iv) Nappies, including cloth and adult nappies.
The panel further recommended that government should expedite the provision of free sanitary products to the poor and that the zero-rating of school uniforms be done only if they can be separated from general clothing.
The report also highlights some programmes on the expenditure side that would assist poorer households, such as the strengthening of the National School Nutrition Programme and increases in the Child Support Grant and Old Age Pension.
According to National Treasury, comments in response to the panel’s recommendations would be very helpful if they included consideration of whether: (i) The recommendations will significantly benefit poor households, and whether such benefit can best be achieved through other means, for example, through government expenditure programmes; (ii) All significant aspects of the revised terms of reference dated 29 May 2018 have been explored in the report; (iii) The panel’s recommendations are consistent with other relevant government policy objectives (e.g. that the food items recommended for zero-rating are consistent with the Department of Health’s policy on nutrition); and (iv) The recommendations are consistent with the fiscal framework adopted by Parliament.
