A Closer Look

Why Eliminating VAT and Trade Tariffs is Beneficial to Consumers

Our Fact Sheet this week is an unpacking of the call to remove trade tariffs from imported chicken. But there are also calls to reduce or eliminate the VAT on chicken. In our press release to introduce the Fact Sheet, we raise a number of issues.

A shock news report this week described how children in rural KZN were eating sand to still their hunger.

Several studies in South Africa have warned that food inflation is about to soar as the effects of the pandemic, the rioting in KZN, and the war in the Ukraine impact South Africa’s food security. A report from IPC (Integrated Food Security Phase Classification), a global food security reporting network, announced that in 2022, 20% of South Africans faced a food security crisis. While StatsSA announced that the country is facing acute food shortages.

The problem is not a lack of food – South Africa produces adequate food and imports what it cannot provide itself. The problem is the disruption of the supply chain due to COVID lockdown and the KZN riots, the high cost of fuel, the deterioration of infrastructure, and rising poverty levels that make even the cheapest food unaffordable for the poorest consumers. Already the government has intervened to protect the South African consumer against fuel-prices rises. Now it is necessary to shield the average consumer from the inevitable rise in the cost of food. Chicken is one of South Africa’s staple foods – the most affordable protein for the lower-income consumer. This is about to change as the price of chicken rises rapidly. The Association of Meat Importers and Exporters (AMIE) has therefore joined the call for government to intervene. While many consumer bodies are calling for a VAT zero-rating on chicken, AMIE has suggested that – additionally – lifting tariffs on imported chicken will bring down prices even further across the board.

ChickenFacts has published a Fact Sheet, in which the impact of VAT and tariffs on chicken is analysed and displayed in easy-to-understand graphs and graphics.

Several other foods are zero-rated for VAT, such as brown bread, tinned pilchards, rice, vegetable oil, fresh fruit and vegetables, eggs and edible legumes. Zero-rating chicken is therefore not impossible. And while we import less than 15% of our poultry, the punitive tariffs on chicken imports are allegedly allowing local producers to inflate their prices due to the lack of competition. It is therefore not impossible that lifting or reducing tariffs might bring down the cost of chicken across the board.

In the fact sheet, ChickenFacts sets out the possible impacts that a VAT zero-rating, and the reduction in tariffs, will have on the price of chicken. ChickenFacts invites you, the public, to read and comment on the fact sheet. It can be found here.

Fact Sheet

 

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