Standing Committee on Finance endorses DA plan to cut VAT on food

14 November 2023

The DA notes that the Standing Committee on Finance has endorsed our proposal to expand the zero-VAT-rated food basket. This will alleviate financial pressures on households who are battling to put food on their tables.

The recommendation is set against a backdrop of stunted economic growth, a widening budget deficit, expenditures on a bloated public sector wage bill and ongoing bailouts to failed State-Owned Enterprises.

The DA now calls upon the Minister to act on the Committee’s recommendation. Specifically, the basket must be expanded to include essentials such as bone-in chicken, beef, tinned beans, wheat flour, margarine, peanut butter, baby food, tea, coffee, and soup powder.

The National Treasury has, since the MTBPS earlier this month, indicated that government will have to consider the implementation of additional tax measures to offset large revenue shortfalls over the medium term. However, thus far the Minister has declined to provide definitive answers about the looming tax hikes. While he claims it's premature to discuss tax adjustments ahead of the 2024 National Budget, the absence of a concrete response suggests possible taxation increases are on their way.

South Africa is already beset with one of the most onerous tax regimes in the world and the DA is therefore concerned about the looming uncertainty the Minister's ambiguity has fostered. The lack of specific details surrounding tax adjustments is causing uncertainty on the market and is dampening investment planning.

It must be clear, we will categorically oppose the implementation of any additional taxes or increment in tax rates, as it would only serve to further impede economic growth, deepen the consumer confidence crisis, discourage investment and savings, and put more pressure on the 81% of South African households who are already skipping one meal a day due to soaring food costs.

Should the ANC government impose increased taxation, it will encounter massive resistance as taxpayers have grown increasingly wary of this government's propensity to squander their hard-earned money.

Instead of levying new taxes to fund an expanded zero-vat rated basket and continued irresponsible government expenditure, the Minister should heed the recommendations presented in the DA's Alternative MTBPS. Our proposals emphasise prudent expenditure management which eliminates the need for any tax increases. In fact, there is sufficient space for the expansion of the zero-VAT-rated food basket without any increases in taxes on other fronts.

Issued by Dion George, DA Shadow Minister of Finance, 14 November 2023