COST OF LIVING
KHAYA SITHOLE: Taxing times bring desperation and debt
Since April 1 South Africans have had to deal with the practical realities of the austerity budget presented by former finance minister Malusi Gigaba in February. Its most pervasive features — the increase in value-added tax (VAT), the levy on fuel and sin taxes — have finally hit the pockets of all citizens and made dents in their disposable incomes. To alleviate the burden of the VAT increase on the poor, the government has committed to assessing the possibility of expanding the basket of zero-rated food items. At present only 19 items qualify for this concession, mainly the core of the staple diet of poor citizens. The problem, however, is that with the exception of unprocessed goods, the zero rating applies at the final product level rather than at primary input level. Brown bread is zero-rated, for example, but its primary inputs — flour, water and electricity — remain standard-rated. As a consequence, the increase in VAT from 14% to 15% will have knock-on effects on the produc...
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