The African National Congress (ANC) has taken decisive action to alleviate the burden of soaring food prices on South African consumers, instructing the government to expand the list of zero-rated foodstuffs.
This announcement was made by ANC Secretary-General Fikile Mbalula during a media briefing at Luthuli House, following the National Executive Committee (NEC) meeting held from 25 to 28 October.
Currently, the zero-rated foodstuffs list comprises 19 essential items, including brown bread, maize meal, and various pulses.
Grain SA economist Heleen Viljoen has suggested that the list could be expanded to include other staple foods such as poultry, white bread, and sorghum, which are vital for many households across the nation. “All these products can be considered as staple foods for the majority of South Africans,” remarked Viljoen.
Recent findings from the Pietermaritzburg Economic Justice & Dignity Group (PMBEJD) reveal that the average cost of the Household Food Basket has reached R5,348.65 as of October, highlighting the mounting pressure on families dealing with rising living expenses.
Mervyn Abrahams, programme coordinator at PMBEJD, pointed out that core foods remain unaffordable.
“These foods ensure that families do not go hungry while also being the primary basis for meals,” he explained. He added that in October, the cost of 17 essential foods jumped by R47.92 (1.7%) compared to the previous month, with 14 of these items witnessing price increases.
Abrahams stressed the urgency of making these foods affordable, as doing so would enable families to incorporate more nutritious options, such as fruits and vegetables, into their diets. “For a healthy populace, it is essential that the cost of these foods is manageable,” he noted.
Ncumisa Mkunqwana, CEO of Chapu Chartered Accountants, provided insight into the implications of zero-rating food items on the VAT framework.
“A zero-rated supply is a taxable supply on which VAT is levied at the rate of 0%,” she explained, indicating that suppliers can still claim input VAT deductions. However, Mkunqwana emphasised that the broader impact on the VAT base would depend on the range of goods included in the zero-rated category.
In alignment with the ANC's advocacy, the Federation of Unions of South Africa (FEDUSA) is also lobbying for the expansion of the zero-rated basket of goods, aiming to ease the financial strain on low-income households. This initiative is deemed crucial for bolstering food security as living costs continue to rise.
Echoing these sentiments, Professor Maxwell Mudhara, an agricultural economist at the University of KwaZulu-Natal, warned that merely zero-rating food items would not adequately address the issue of food price inflation.
“We need a more generalised effort to reduce food price inflation through the Department of Agriculture,” he stated.
Mudhara also called for a comprehensive approach to harness national resources aimed at enhancing agricultural productivity and production.
As South African households grapple with tough economic realities, the potential expansion of the zero-rated foodstuffs list could provide much-needed relief, although experts urge a broader strategy to tackle the fundamental issues driving food insecurity.
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