Willowton Group has announced that it will absorb the one percentage point increase in the value-added tax rate (VAT) for three months (April, May and June) effectively shielding their valued consumers from the VAT increases announced recently in the national budget.

“We truly believe that there is no better feeling than giving back to the South African community and, right now, the community needs our support,” said Willowton chief executive officer, Zubeir Moosa, expanding on the group’s decision. “The VAT increase will be felt by every individual with already stretched budgets battling to meet rising prices.

“Our range of quality products are consumed and used primarily by those in lower to middle-income groups and we feel it is our responsibility, as a socially-conscious organisation, to take on the financial burden and offer our valuable customers some form of respite.”

Disproportionately affecting poorer consumers

VAT increases from 14% to 15% effective 1 April 2018 and is the first hike of the regressive tax since 1993. The government is also investigating expanding the goods exempt from attracting the tax as a means for assisting poorer households, but VAT is renowned for disproportionately affecting poorer consumers. Whilst many of Willowton’s products such as cooking oil, maize meal and rice are VAT free, there are an equal number of products such as margarine, soaps and candles that attract VAT.

Moosa says the group will absorb the 1% VAT increase coinciding with the introduction of the higher rate on all its branded consumer retail packaged products, including Sunfoil, Crown, Allsome, Sunshine D, Romi, D’lite, Wooden Spoon, Cordon Bleu, Sona and Britelite range of products, whilst paying the 15% VAT rate to Sars.

Challenge other FMCG companies

“Willowton is profoundly aware that these are difficult times for consumers with high unemployment rates and escalating food and transport costs and this is our way of showing customers that we care for their well-being. We also challenge other FMCG companies and retailers to follow our lead in protecting the already hard-hit consumers of this country,” he says.

The savings will apply to all Willowton clients and store outlets as the group effectively reduces its selling prices by 1%, whilst effectively allowing retailers and wholesalers to hold its ultimate selling prices of its range of products.