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Calls to Scrap VAT on Chicken, Luxury Taxes on Smartphones in South Africa. Amid rising living costs and economic pressures, stakeholders in South Africa are urging the government to eliminate value-added tax (VAT) on chicken and remove luxury taxes on smartphones to support impoverished households.
These calls follow President Cyril Ramaphosa’s recent address at the opening of parliament, where he highlighted measures to aid struggling households.
President Ramaphosa stated that the Government of National Unity (GNU) plans to expand the basket of essential food items exempt from VAT.
Additionally, the government will review administered prices, including the fuel price formula, to identify areas where prices can be reduced.
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This week, the South African Poultry Association (SAPA) advocated for chicken to be included in the VAT-exempt essential food items. SAPA emphasized that chicken is South Africa’s most popular and affordable meat, and making it VAT-exempt would provide immediate financial relief to poorer households.
The association noted that chicken producers are striving to keep prices low, and removing the 15% VAT on commonly consumed chicken portions would significantly aid low-income families.
The Democratic Alliance (DA) has supported SAPA’s proposal. DA’s Willie Aucamp highlighted that chicken is a vital source of affordable protein for millions of low-income families, and exempting it from VAT would ease the financial burden on consumers and ensure access to essential nutrients.
Calls to Scrap VAT on Chicken: A Dive Into the Call for VAT Exemption for Smartphones
In addition to the push for VAT exemptions on chicken, the Association of Comms and Technology is calling on the government to scrap luxury taxes on smartphones.
The association argued that smartphones are essential for providing internet access to poorer South Africans, making them a necessity rather than a luxury.
South Africa’s new Communications Minister, Solly Malatsi, also supports measures to reduce smartphone costs.
The DA’s Information and Communications Technology Policy emphasizes the importance of making smartphones affordable, identifying high device costs as a primary barrier to internet usage.
Several companies, including Vodacom and MTN, have responded to this market gap by offering more affordable devices. However, high taxes on these devices continue to inflate prices.
The DA argues that reclassifying smartphones as non-luxury items and reducing or eliminating associated taxes would significantly lower costs and increase ICT use.
Implications for South Africa’s Economic Landscape
The push to exempt chicken from VAT and reduce taxes on smartphones reflects broader efforts to address the cost-of-living challenges facing many South Africans.
These proposed changes aim to promote economic equity and ensure that essential goods and services remain accessible to all citizens.
Removing VAT on chicken would immediately reduce food costs for low-income households, providing much-needed financial relief.
Similarly, reducing taxes on smartphones would enhance internet access and digital inclusion, supporting the country’s economic development and digital transformation efforts.
However, implementing these changes would also impact government revenue. VAT is a significant source of tax revenue, and adjustments to the tax structure must balance the need for financial relief with the potential reduction in tax income.
Policymakers will need to carefully consider these factors to ensure that any changes support both economic equity and fiscal sustainability.
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