VAT ZERO RATING
Review panel faces tough balancing act
Panel reviewing SA’s basket of zero-rated items has a seemingly impossible task
The independent panel reviewing SA’s basket of zero-rated items has a seemingly impossible task. They have two months to balance the collection of revenue while mitigating its impact on the poor. On April 1 value-added tax increased from 14% to 15%. The announcement in the Treasury’s 2018 budget attracted a backlash from civil society, political parties and trade unions, which called for a significant expansion of the list of zero-rated items. In response, Finance Minister Nhlanhla Nene appointed a panel chaired by Ingrid Woolard, an economics professor at the University of Stellenbosch, aimed at mitigating the impact the VAT hike is expected to have on the poor. The team met last week and discussed calls to zero-rate sanitary pads, condoms and soap — and strange requests to include champagne and crab meat on the list. The challenge is to make changes to the VAT-exempt basket without negatively impacting the country’s financial position. "We know the consumption patterns. It’s not h...