VALUE-ADDED TAX
Retailers attempt to keep higher prices from consumers
Squeezed consumers re-arrange their budgets to accommodate the VAT hike
Some retailers have started passing the value-added tax (VAT) increase on to their suppliers, while squeezed consumers are beginning to re-arrange their budgets to accommodate the one percentage point VAT hike and a steep rise in the petrol price. The new VAT rate of 15% came into effect on April 1 and threatens the already weak buying power of South African consumers, who also have to contend with a 72c per litre increase in the petrol price. Former finance minister Malusi Gigaba announced the VAT increase and the rise in the Road Accident fund levy in the February budget. Food retailer Choppies said that, in most cases, suppliers had absorbed the costs. "We had to pass on very few price increases to the consumer, which will have little impact on customers," the company said. Clicks Group CEO David Kneale said the cost of medicines was regulated by the government in terms of the single exit-price mechanism and all prices at Clicks pharmacies were adjusted from April 1. He said Clic...
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