Expanding South Africa’s VAT-Free Food Basket Amid Rising Hunger Concerns

• President Cyril Ramaphosa is considering expanding the list of VAT-free essential food items in South Africa
• Ramaphosa aims to make food more affordable and accessible for all South Africans
• StatsSA’s survey in 2023 revealed that 15% of South Africans experience hunger and over a quarter of households have complex issues accessing food
• Advocates for expanding VAT-free foods argue it will lower food costs for poor households and encourage the inclusion of more protein in their diets
• Critics believe the VAT system does not effectively provide relief to poor and low-income households
• VAT was introduced in 1991 with only brown bread and maize meal being zero-rated
• The list of zero-rated food items has since grown to include 21 different products
• Historical studies show mixed results on the effectiveness of zero-rating food products in benefiting low-income households
• The Katz Commission and National Treasury studies suggest zero-rating benefits higher-income households more in absolute terms but offers some relative benefits to the poor
• OECD study indicates that reduced VAT rates on food do not effectively target support to poor households and often benefit wealthier ones more

Source: businesstech.co.za

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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