NO RELIEF FOR POOR AS ZERO-RATED ITEMS UNCHANGED

Thu 31 October 2024:

With no clear indication on when and how the government intends to expand the list of zero-rated items, South African households will continue to bear the brunt of a rising cost of living. So says the Pietermaritzburg Economic Justice and Dignity Group (PEJD).

Finance minister Enoch Godongwana delivered the medium-term budget in Cape Town on Wednesday. Although he spelt out four key focus areas (macroeconomic stability, structural reform; infrastructure, and state capability), he made no pronouncement on the zero-rated list.

“We are quite disappointed that he didn’t flesh some of that out in as much as he fleshed out important other areas like infrastructure rebuilding, like he spoke about capacitating the state, and other macroeconomic issues,” said Mervyn Abrahams, programme coordinator at PEJD.

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Currently, there are 19 basic food items, as well as illuminating paraffin, which are exempt from value-added tax (VAT). Abrahams suggested that a range of products, from peanut butter and salt to chicken and soups, should be added to the list to ease the burden on consumers.

Expressing disappointment, Abrahams said: “Our fear is that we will be back in that same position come February next year and the cost of living crisis for most South African households will only deepen rather than being addressed as the president had said in the state of the nation address.”

Data from the organisation’s latest Household Affordability Index, a basic nutritious diet costs between R3 750.75 and R6 550.37, depending on the size of the household. Nearly half of the 44 foods in PEJD’s Household Food Basket are zero-rated.

Meanwhile, coalition partners and economic experts have welcomed the speech, noting its growth-focused direction. In an interview with Salaamedia on Thursday, Achiever Group Financial and Investment Advisor at Liberty Group South Africa, Yaseen Badat, said infrastructure investment was crucial.

“Government has understood that ‘we have to take money, we have to start spending, we’ve got to obviously put money back into the economy, back into capital projects’ to ensure that we can increase our infrastructure in the country.

“With infrastructure investment comes job creation, economic stability and everything else thereafter,” he added.