Voices

Be plucky, Parliament. Support VAT-free chicken

2018-08-16 00:40

Parliamentarians of all parties must support poor people and national nutrition by ensuring that value added tax is removed from chicken.

The Woolard panel, which considered additional items that should be VAT zero-rated, could not reach a consensus on chicken and has therefore deferred the issue to Parliament.

This is an issue of national importance, and FairPlay urges all MPs, and particularly those from the ruling party, to look after the interests of the poor.

Chicken has become the staple food for the nation and is the major protein source for poor people.

The government is looking for ways to lift the VAT burden from lower-income households. There is no more effective way to do this than removing VAT from chicken.

The Woolard panel’s recommendations will be considered in Parliament this week, and again later this year after the government has considered public comments, which may be submitted until the end of August 2018.

Economist and FairPlay expert panellist Mike Schussler has expressed his surprise that the panel excluded chicken from its list of recommendations for addition to the VAT-free basket of goods, saying that the panel failed South Africa’s poorest consumers.

“The point of reviewing the basket was to help the poor and to identify items to benefit those consumers and to allow them to afford better nutrition. The panel seemed to forget that and instead was more concerned about the effect a suspension of VAT would have on the producers and retailers, which misses the point altogether.

“If the decision was about the consumer, chicken would have been included – it is a no-brainer as the most widely consumed protein of South Africa’s lowest-income citizens. But the panel seems to be punishing the consumer for the anticipated sins of the producers and the importers. It implies that the panel doesn’t trust the Competition Commission to police the situation and ensure that producers play by the rules, which I believe the industry committed to in detail in its submission to the panel.”

According to Schussler, it is also worth noting that the report fails to take into account the role that would be played by retailers and all fast-food outlets that buy and sell chicken.

Retailers have far more pricing power than the producers do, yet the panel only focused on the producers and importers and omits any consideration of these other big roleplayers.

“I can only conclude that this is not a decision based on sound economic considerations, but rather political ones. It would be a great pity for the consumer if parliament does not reconsider the proposal to include South African chicken in the VAT-free basket. The economic benefits are clear.”

FairPlay will now direct its campaign for VAT-free chicken to parliamentarians of all parties, realising that the responsibility is on the ANC in particular to ensure that South Africans, particularly those with a low income, benefit from VAT-free chicken.

We will also be working with unions and other organisations to help bring relief to those who need it most.

This is the best way to ensure wider access to protein so that children grow up healthy, older citizens have the nutrition they need, and food security is protected for all.

Francois Baird is founder of FairPlay, a not-for-profit trade movement that fights to end predatory trade practices.

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September 23 2018