The decision by the Independent Panel on the review of the current zero-rated items, to add only 8 items (see the announcement here) to the list is underwhelming and will do little to cushion vulnerable households whose spending power has been squeezed by the 1 percentage point VAT increase announced in the 2018 National Budget.
The DA remains firm on its position that the only effective measure to protect South Africans and solve the government’s fiscal squeeze will be to scrap the 1% VAT hike and cut expenditure.
The bloated public service, and the public sector wage bill must be frozen in order to offset the revenue shortfall that may triggered by the scrapping of the VAT increase.
The zero rating of additional items will be of marginal benefit those who need support and is not the answer. The revenue lost will be recovered elsewhere and this will, in any event, end up being paid by the poor.
South Africa’s poor households are already facing added cost of living pressure from fuel price hikes and it is essential that the government focuses on cutting its own fat rather than adding more demands on their meagre incomes.