Calls to scrap tax and VAT on two items in South Africa
Many stakeholders are calling on the government to scrap value-added tax (VAT) on chicken and luxury taxes on smartphones to help poor South African households.
These calls follow President Cyril Ramaphosa’s opening of parliament address, where he highlighted interventions to assist poor households.
He said that the Government of National Unity (GNU) will look to expand the basket of essential food items exempt from VAT.
They will also undertake a comprehensive review of administered prices, including the fuel price formula, to identify areas where prices can be reduced.
This week, the South African Poultry Association (SAPA) urged the government to include chicken in the basket of essential food items exempt from VAT.
SAPA said chicken is South Africa’s most popular and affordable meat source, and making it VAT-exempt will help poorer households.
The association said South Africa’s chicken producers are doing everything in their power to keep chicken prices down.
Removing the 15% VAT from the chicken portions, which are most consumed by poor households, would bring immediate price relief.
SAPA has long argued that targeted chicken products should be exempt from VAT because of their importance in the diet of millions of poor people.
The DA welcomed the South African Poultry Association’s endorsement of adding chicken as another VAT-free essential food item.
“Chicken is not only South Africa’s most widespread meat but also an important source of cheap protein for millions of low-income families,” the DA’s Willie Aucamp said.
“The far-reaching impact of abolishing 15% VAT on these products, including chicken, cannot be overemphasised.”
“This will ease the burden on consumers while ensuring the availability and affordability of vital nutrients for the neediest population groups.”
He said exempting chicken from VAT is a decisive step towards addressing cost-of-living challenges and promoting economic equity.
The Association of Comms and Technology has called on the government to scrap luxury taxes on smartphones.
The association argued that smartphones are a necessity to provide poorer South Africans with Internet access.
“South Africa’s Communications Minister argues that smartphones are essential for today’s digital economy, yet they face luxury taxes,” it said.
New communications minister Solly Malatsi, who comes from the DA, has also called for interventions to reduce the cost of smartphones.
The DA’s Information and Communications Technology Policy has a strong focus on the affordability of smartphones.
“The costs associated with devices, smartphones among others, have been identified as one of the primary inhibitors to internet usage,” the DA said.
Several companies, including Vodacom and MTN, have identified this gap in the market and responded with more ‘affordable’ devices.
The party said a factor that contributes to the cost of smartphones in the country and Africa as a whole is the high taxes that these devices incur.
“Therefore, measures which will cut taxes and reduce tariffs paid would make a considerable difference in addressing the cost problem,” the DA said.
It said the government can make smartphones more affordable by not classifying smartphones as ‘luxury items’ and thereby reducing taxation costs.
Smartphones and other devices below a certain value could also, in total, be excluded from any form of tax or duty.
The DA said, “Taxes can also be removed or lowered on devices. This will increase the uptake of ICT use.”
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