Tell Treasury to stop stalling and remove VAT from these items

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Tell Treasury to stop stalling and remove VAT from these items
Tell Treasury to stop stalling and remove VAT from these items
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When the VAT hike was announced in February, we quickly mobilised to stop the hike, although we forced government to admit the VAT hike would hurt the poor, Parliament passed the VAT hike anyway. As a compromise our public pressure forced ex-Finance Minister Nhlanhla Nene to consider removing VAT from more essential items. A panel of experts was set up to review the list of zero-rated VAT items. Although the VAT exempt list already includes 19 basic food items, people cannot survive on 19 food items alone and need access to school uniforms and sanitary pads. With other organisations fighting for budget justice, we ensured the expert panel heard our voices. The expert panel's report released in August, suggested the inclusion of 6 items to the VAT exempt list- nappies, sanitary pads, school uniforms, white bread and bread and cake flour [1].

With South Africa in another recession and the fuel price increase, the poor are in an economic crisis. The VAT increase suggests the burden of fixing SA’s economy should be laid on the shoulders of the poor. 89% of companies are not tax compliant [2], these mega-rich corporates and wealthy South Africans who are avoiding paying tax should pay what they owe.

With no press releases or statements, treasury still haven’t made a clear stance on the VAT exemption. The Finance Minister called for expanding the list of zero-rated items and set up the panel of experts but Treasury are silent on the final step of removing VAT from these items.

Tito Mboweni’s recent appointment presents a clear opportunity for the people of Mzansi to put pressure on Treasury and ensure zero-rated items are at the top of their agenda. Treasury must be made to follow the recommendations made by the expert panel and commit to including nappies, sanitary pads, school uniforms, white bread and bread and cake flour in the list of tax exempt items. We must also call for treasury to ensure after zero-rating these items, companies don’t pass the cost on to consumers by increasing their prices.

Dear Minister of Finance Tito Mboweni, Deputy Minister of Finance Mondli Gungubele and National Treasury deputy director-general Ismail Momoniat.

The VAT hike has hit the poor the hardest and with the fuel price increase and the South African economy in another recession, the poor are in economic crisis.

We call on you to implement the recommendations of the expert panel and include nappies, sanitary pads, white bread, bread and cake flour and school uniforms to the list of zero-rated items. With this implementation, there is danger of companies passing the costs on to the consumer by raising the prices of their goods. We call on you to ensure this doesn’t happen.

[1] Independent Panel of Experts for the Review of Zero Rating in South Africa, Recommendations on Zero Ratings in the Value-Added Tax System 

[2] Corporates not ‘tax compliant’. Baldwin Ndaba and African News Agency for The Mercury 22 Aug 2018

Will you sign?

We are closer than ever to removing the tax on sanitary pads, school uniforms, nappies and bread flower. The Finance Ministers own panel of experts have recommended Treasury remove VAT from these items. If enough of us put pressure on the new Finance Minister Tito Mboweni, Treasury will have to act.