The Main Stage Podcast<\/a>.<\/p>\n\n\n\nHe stated that he was opposed to the government\u2019s strategy of having no value-added tax (VAT) on products and services.<\/p>\n\n\n\n
Numerous products are zero-rated, including 19 basic food items, illuminating paraffin, petrol, diesel, farming inputs, and exports.<\/p>\n\n\n\n
International transport services, sales of going concerns, and certain government grants are also exempt from VAT.<\/p>\n\n\n\n
Many services, including non-fee financial services, educational services, residential rental accommodation, and public road and rail transport, are also exempt from VAT.<\/p>\n\n\n\n
Roodt argued that all products sold in South Africa should be subject to the same value-added tax rate. The only exception should be exports.<\/p>\n\n\n\n
He explained that when the government starts zero-rating some products to lower their prices, it undermines the allocation of resources in the economy.<\/p>\n\n\n\n
Having different VAT rates further opens the door to corruption, misallocation of resources, and other problems.<\/p>\n\n\n\n
That does not mean that the government should not assist the poor. However, that should be done on the expenditure side of the budget.<\/p>\n\n\n\n
\u201cThe poor should not get a break on taxes. Instead, the government should increase grants to improve poor people\u2019s financial situation,\u201d he said.<\/p>\n\n\n\n
Roodt explained that using expenditure will help the government to track precisely how much it spends to improve the lives of poor people.<\/p>\n\n\n\n
However, zero-rating a basket of goods and services provides no accurate indication of how much money is allocated to the poor.<\/p>\n\n\n\n
This is because wealthy people also purchase zero-rated food, like brown bread, rice, beans, eggs, and milk.<\/p>\n\n\n\n
\u201cRich people buy some of the zero-rated food products and feed them to their dogs, because it is cheaper,\u201d he said.<\/p>\n\n\n\n
\u201cWhat the government is essentially doing is giving a tax break on items which help rich people feed their dogs.\u201d<\/p>\n\n\n\n
He said the government should not do that. It is much better to have a VAT rate which is the same across all products, and to help the poor on the expenditure side.<\/p>\n","protected":false},"excerpt":{"rendered":"
Efficient Group chief economist Dawie Roodt explained that having a basket of VAT-exempt items is a bad idea and there are better ways to help the poor.<\/p>\n","protected":false},"author":10,"featured_media":833901,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[1459,2562,21769,7438],"class_list":["post-842819","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-dawie-roodt","tag-efficient-group","tag-value-added-tax","tag-vat"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/842819","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=842819"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/842819\/revisions"}],"predecessor-version":[{"id":842820,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/842819\/revisions\/842820"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/833901"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=842819"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=842819"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=842819"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}