The nineth annual Maritzburg SOcial Justice Film and Arts Festival, hosted by PACSA in collaboration with the University OF KwaZulu Natal, Alan Paton Centre and Struggle archives, The Witness, Gay and Lesbian Network, KZN Language Institute, Speak through art, Groundwork and AFRA (Association for Rural Advancement) from 27th-29th September.
PACSA (Pietermaritzburg Agency for Community Social Action) is an independent, faith-based NGO that has worked to achieve social and economic justice in the uMgungundlovu District in KwaZulu Natal, South Africa, for over 30 years. It facilitates development processes with local community partner organisations at their request, and accompanies them over time as they seek to achieve community development as well as influence structural change.
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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.
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.
Expanding the basket of zero-rated foods has been contested on the basis of the following arguments:
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 conceptualize the impact of these proposals for working class households.
The PACSA Food Price Barometer is an indicator of food price inflation on the baskets of low-income households. It shows the impact of food price inflation for low-income urban households in Pietermaritzburg but is able to express a picture of what is happening in low-income homes across South Africa. Because of the way women living on low incomes allocate their expenditures: food prices cannot be analysed outside the economy; nor can the economy be analysed outside the foods in our trolleys and on our plates. The Barometer is a useful instrument to measure the state’s political choices and economic performance. It finds that households living on low incomes are coming under enormous pressure as the crisis in our economy deepens and many of the buffers and instruments to mitigate the impact of the crisis are not available. Read more..