South Africa’s VAT rate increased from 14% to 15% on 1 April, and this has raised concerns on how this will impact the most vulnerable in the country.

To ensure the VAT hike is not regressive, the current list of 19 items will remain zero-rated, Treasury said, with the panel of experts considering expanding the list.

“The panel will also consider how specific expenditure programmes can be improves to better target poor and low-income households (eg National School Nutrition Programme, food stamps, etc),” it said.

The panel is expected to deliver its first report by 30 June 2018, in time to be included in draft regulations being compiled in July 2018.

The current list of zero-rated food items includes:

Brown bread

Maize meal

Samp

Mielie rice

Dried mielies

Dried beans

Lentils

Pilchards in tins

Milk powder

Dairy powder blend

Rice

Vegetables

Fruit

Vegetable oil

Milk

Cultured milk

Brown wheaten meal

Eggs

Edible legumes

Other goods and services that are currently zero-rated for VAT include illuminating paraffin and goods which are subject to the fuel levy (petrol and diesel), and well as  certain government grants and education services.

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