Consumers are yet to see the benefits of government’s decision to tax exempt some items in their food basket. On Wednesday, newly-appointed Finance Minister Tito Mboweni announced the revenue loss associated with zero-rating these items is estimated at R1.2 billion.
However, some are calling for more items to be zero rated while small businesses such as Eyethu Bakery in Orange Farms say this move will boost cash flow.
The increase in value added tax back in April has dented the pockets of consumers. Added to that, has been the constant increase in price of petrol and other associated costs.
The announcement by Minister Mboweni has been warmly welcomed by Lindi Morolo who owns a small bakery in Orange Farms. She employs 12 people. Her small bakery serves close to 400 customers daily who buy bread, rolls and fat cakes.
Morolo says vat exemption of white bread flour is good news for her business. Women have long been calling for government to make sanitary pads free.
Experts say zero rating as a mechanism to decrease prices is a populist move on the part of government, especially because flour is already cheap.
Government believes that the zero rating of white bread flour, bread flour and sanity pads is a step in the right direction of helping particularly the poor the cope with the effects of the cost of living.
However, organizations such as the economic justice and dignity group say government should stop tinkering with zero-rating of the vat system and rather focus its efforts on regulating food prices and increasing wages and social grants.
It says households do not have enough money to put food on the table in the first place and this in turn is leading to a massive crisis.
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