Sanitary pads, white bread flour to be added to VAT free items

26 October 2018 | Economic factors

Finance Minister Tito Mboweni says government proposes that come April 2019, three items, including sanitary pads, will be added to the zero-rated list.

Earlier this year, government increased value-added tax (VAT) from 14% to 15%. An independent panel of experts to review the list of 19 zero-rated food products was set up to consider how best government could mitigate the impact of the VAT increase on poor and indigent households. The panel of experts has since released the report and recommended that six items be added onto the list of zero-rated items.

“An independent panel of experts investigated options to mitigate the impact of the VAT increase on lower income households.

“My thanks to the panel for their excellent work. I would also like to thank the 30,000 individuals and NGOs who provided comments on the panel’s recommendations,” Mboweni said.

The Minister received 3,299 tweets from Twitter users, with one of them, Tintsi Ngwenya, saying, “Sanitary pads should be tax free”.

Mboweni said from 1 April 2019, sanitary pads, bread flour and cake flour will be zero-rated.

“The revenue loss associated with zero-rating these items is estimated at R1.2 billion. However, zero-rating these products targets low-income households and restores the dignity of our people,” he said.

The announcement will come as good news to several women’s advocacy groups, who have for months taken their calls for removing VAT from sanitary products, with some saying it was unfair to impose a tax on a product that women need for biological reasons.

Carbon tax postponed to 1 June 2019

The Minister said, meanwhile, that after hearing the concerns of business and labour during Parliamentary hearings, the implementation of the Carbon Tax has been postponed by six months.

“The carbon budgeting system and the carbon tax will be aligned. This is done by imposing a higher tax rate as a penalty for emissions exceeding the carbon budget.

“The original date of implementation was 1 January 2019, but this will be postponed to 1 June 2019.”