On the 1st of April 2018, despite massive resistance, government went ahead and increased the VAT rate to 15%. We have argued in the past that increasing the VAT rate on food was unwise.
This media statement using our April 2018 data looks at the month-on-month impact of the VAT hike for households living on low incomes. It is a snap shot as the effect of the VAT hike will take time to run through the value chains however already it signals some worrying trends. Foods subject to VAT make up 54% of the total cost of the PACSA Food Basket. The statement finds that the increase in VAT by 1% resulted in a 6.5% increase in the total VAT levied on the foods subject to VAT on the PACSA Food Basket, moving the total VAT payable to R221.59.
The PACSA Food Basket has now reached its highest level of R3 144.02. It has increased by 9% over the past eight months. Hiking the VAT rate has made the affordability crisis deeper and will have a considerable negative impact on households living on low incomes, who are already in a very severe crisis.
We call for food to be made a public good; to remove all VAT from food; to increase wages to those of a living wage and to regulate food prices.April 2018 PACSA monthly food price barometer
Budget 2018 proposed hiking the VAT rate to 15% and levying a 52 cents hike on the fuel levy. Using food as an entry point and drawing on PACSA’s food price barometer research, the following short paper is intended as a resource to better understand and conceptualise the impact of these proposals for working class households. Read full paper
Zero-rated foods do not protect the poor from the negative impact of the increase in VAT to 15% 2018 VAT Response PACSA
26 participants from 12 countries gathered for a 4 day consultation hosted by PACSA and AGEH, a German Association for Development Cooperation, in Paarl, outside Cape Town, to re-think development as liberation and to promote an alliance of international faith based and Church related organizations promoting exchange of volunteers as an expression of human solidarity.
We call on the Portfolio Committee on Labour to consider the political consequences of passing a poverty-level National Minimum Wage which with the possible amendments to the Labour Relations Act and Basic Conditions of Employment Act will be felt for generations. These will lock Black South African workers and their families into deeper poverty and reproduce the low growth, low wage and low jobs trajectory. Read the full submission
PACSA letter to the Standing Committee on Finance on expanding the zero-rated basket to mitigate the effect of VAT
Expanding the basket of zero-rated foods has been contested on the basis of the following arguments:
- Expanding the basket may disproportionately benefit the rich (because rich or poor we share quite a few common foods).
- Selecting the new foods to be included in the zero-rated basket is incredibly complex as what foods are eaten, how foods are prepared and changing households purchasing patterns are all influenced by household specific and other complicated external variables. Even with the experience PACSA has around tracking food patterns and prices, there are just far too many variables in creating an expanded zero-rated basket that responds to the requirements of the working class and the impact on the larger economy. At best, we would be able to make an educated guess – but this hardly seems a sufficient response to the crisis we are in. Read full statement
Budget 2018 does not respond to the economic crisis as experienced by millions of Black South Africans. 2018_Budget_response_PACSA
The Nutrition deficit on the plates of South Africans is the consequence of economic and political choices
On the 1st of February PACSA’s Research and Advocacy Coordinator, Julie Smith, made a presentation at a learning space for dieticians and nutritionists working in the public health care sector and in private practice in the Western Cape. PACSA was invited to talk through its Food Price Barometer work.