Sapa issues statement on proposed VAT exemption for chicken

Image by congerdesign from Pixabay

The announcement, made during President Ramaphosa’s opening of parliament speech, indicates multi-party support for an initiative that will help to lower food prices for low-income households.

Sapa strongly believes that targeted chicken products should be included in an expanded list of items that are zero-rated for VAT.

Chicken is South Africa’s most popular and most affordable meat source, accounting for 66% of all meat consumed in the country. It is therefore the main source of meat protein for millions of poor people, including children in poor families.

South Africa’s chicken producers are already doing everything in their power to keep chicken prices down. Removing the 15% VAT from the chicken portions, most consumed by poor households would bring immediate price relief and ensure that essential food items remain affordable.

The basket of zero-rated food items was last reviewed in 2018, after the VAT rate was raised to 15%. Sapa proposed to parliament that targeted chicken products should be exempt from VAT because of their importance in the diet of millions of poor people. This included the popular packs of individually quick frozen (IQF) chicken portions.

Because of differences in the review panel, chicken was not included in the expanded list of VAT-exempt food products.

In the last six years the need for VAT exemption has increased as food prices have risen sharply, locally and globally. Food inflation might be falling, but food prices remain high. The Competition Commission has noted that consumers are buying more tinned pilchards, which are mainly imported but VAT-exempt, while chicken is not.

Every year since 2018, South Africa’s poorest consumers have paid an additional 15% on every chicken portion they have bought. It is time to change that.