Consumer Goods Council calls on govt to reconsider U-turn on VAT zero-rated food items
The decision not to increase VAT means that 'the measures to cushion lower-income households against the potential negative impact of the increase need to be withdrawn', Treasury said.
Customers shopping at Shoprite. Image: Abigail Javier/EWN
Motheo Khoaripe - in for Stephen Grootes, interviews the CGCSA CEO, Zinhle Tyikwe.
Parliament on Wednesday called off a meeting to discuss the new bill introduced by Finance Minister Enoch Godongwana to reverse the proposed increase in value-added tax (VAT).
As the technical process of finalising the change continues, the Consumer Goods Council of SA has raised a number of concerns it wants government to take into account.
While 'cautiously' welcoming the decision to withdraw the planned 0.5 percentage point VAT hike in the interests of financially stressed consumers, the Council is worried about the accompanying U-turn on the decision to expand the basket of VAT zero-rated food items.
“This is particularly concerning for the CGCSA and our members because many South Africans are hard hit by the cost of living and the zero-rating of the additional products would have gone a long way to not only cushion consumers but also improve healthy eating and healthy lifestyles and improve food security."
Consumer Goods Council of South Africa
They really want government to reconsider this decision in particular while they're still looking at the framework of VAT or tax, says CGCSA CEO, Zinhle Tyikwe.
She also highlights the fact that government’s decisions have had a significant impact from a practicality and implementation perspective for their members.
RELATED: 'Businesses have already spent huge sums on preparing for VAT hike that's now been reversed' - BLSA
This backtracking on VAT affects a whole value chain where the tax needs to be included before the price which consumers actually see at the point of sale, Tyikwe emphasizes.
"It's a big undertaking - there are compliance issues, tax issues, system updates... And it's not only from the retailers' perspective at the point of sale with price changes on the shelves and at distribution and warehousing spaces; the manufacturers also had to input the costs that come with manufacture any product."
Zinhle Tyikwe, CEO - Consumer Goods Council of SA
"The value chain that we represent is from farm to fork - the whole of the food and non-food value chain and services, including our quick service restaurants."
Zinhle Tyikwe,CEO - Consumer Goods Council of SA
Tyikwe says CGCSA members have undertaken not to pass on the costs incurred during this process to the consumer.
"Going forward, it is critical that Government works speedily, in unity and in consultation with affected parties to eliminate unnecessary financial burdens, confusion and to promote regulatory certainty."
Zinhle Tyikwe, CEO - Consumer Goods Council of SA
Scroll up to the audio player to listen to the full conversation