Budget 3.0: Treasury makes U-turn on expanding zero-rated food items list
In the failed March budget, Finance Minister Enoch Godongwana came under fire for pressing ahead with a revised 0.5% increase as part of a massive revenue drive.
Minister of Finance, Mr Enoch Godongwana, arrives with his executive to deliver the 2025 Budget Speech during the National Assembly plenary at the Cape Town International Convention Centre. Picture: Phando Jikelo/ Parliament of SA.
CAPE TOWN - After withdrawing the decision to increase the standard value-added tax (VAT) rate, the National Treasury has made another U-turn on tax proposals, this time rescinding the expansion of zero-rated food items.
In the failed March budget, Finance Minister Enoch Godongwana came under fire for pressing ahead with a revised 0.5% increase as part of a massive revenue drive.
At the same time, he announced expanding the zero-rated food basket to cushion the blow for the poor.
When he tabled the latest version of the budget on Wednesday, Godongwana now retracted that decision.
In March, the list of zero-rated items was increased from the existing essential items to make food more affordable, especially for lower-income households.
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Zero-rated goods are those exempt from the 15% VAT rate.
At the time, Godongwana described the move as a blunt tool because it doesn’t guarantee reduced food prices.
The items included edible sheep offal, poultry, goats, swine and bovine animals; specific meat cuts such as heads, feet, bones and tongues; a dairy liquid blend; and tinned or canned vegetables.
The list is back down to 21. The last time the zero-rated list was expanded upon was in 2018.
This means the VAT rate, zero-rated items and a proposed inflation-related increase in the fuel levy are the only main tax policy changes in the May budget.
Other tax proposals made in the March budget, including changes to excise duties, remain unchanged.