- South Africa’s National Treasury ruled out expanding the VAT-free basket due to financial constraints, especially since the proposed VAT hike was abandoned, making this measure unaffordable.
- Finance Minister Godongwana’s initial proposal aimed to expand the VAT-free basket to cushion the poor from VAT increases, but this was dropped once the VAT hike plan was scrapped.
- Calls to include bone-in chicken and other meats were rejected, as zero-rating only one meat type could create market distortions and hurt the broader meat industry.
- Research from the Red Meat Association revealed that selectively zero-rating certain meats disrupts markets, with possible price increases and negative impacts on local producers due to import reliance.
- Expanding the VAT-free basket would result in an estimated R4.9 billion revenue loss for the government, making it unsustainable under current economic conditions.
- The Treasury emphasized that targeted spending to assist poor households is more effective than a broad expansion of the VAT-free basket, which may benefit all income groups, not just the poor.
Source: businesstech.co.za
