The proposed zero-rated items list have included school uniforms and pads.
The list of zero-rated VAT items may be extended to include a number of necessary but expensive items following an announcement of the findings of an independent panel. Nhlanhla Nene, the South African Minister of Finance, announced the proposed list which includes sanitary products and white bread on Friday, August 10.
Bread flour, school uniforms and both adult and baby nappies are also on the list which, if approved, will provide much-needed relief to cash strapped consumers.
The panel’s findings comes after the one percentage point VAT increase announced on April 1 this year. The panel, chaired by Prof Ingrid Woolard of Stellenbosch University, was appointed to evaluate and review the inclusion of other items as zero-rated. The nine-member panel which included Wits University’s Prof Imraan Valodia, was also convened to “consider other measures to mitigate the impact of the increase on poorer households”. This was according to a statement released by National Treasury.
The panel recommended that government should rush the provision of free sanitary products to the poor.
Dr Kenneth Creamer from the School of Economic and Business Sciences at Wits, said the proposed list would add some relief after the VAT increase.
“VAT was increased by 1% earlier this year as the South African government faces a rising debt burden and has rising expenditure obligations including to pay for programmes to increase access to higher education and to pay for the country’s public health services, schooling and social security transfers”.
He added, “The recommendation targets items that make up an important part of the purchases of poorer households and will have the effect of lowering the cost of living for such households.”
Wits third-year BCom Accounting student, Mukhtaar Osman, said that the proposed list could be better. “I don’t think things like white bread and school uniforms should be added to the list, it is a bit unnecessary and those things are not necessities.” Osman believes that more nutritional food items should be added to the list.
The public have until August 31 to comment on the proposed list by submitting an email to the National Treasury (email@example.com).