Despite many hopes that Tito Mboweni would shift VAT from 15% down to its original 14%, the number remains the same.
However, certain products will continue to be free from VAT.
In addition to the existing list, three more items have been added.
The zero rated list is compromised of several staples of South Africans' diet. these include brown bread, rice and maize meal. Additionally, eggs, milk and vegetables are also VAT-exempt.
On top of this, from April 2019 white bread flour, cake flour and sanitary pads will also be VAT-free. The decision to add these items was made after an government investigation last year into the effects of zero-rating more products.
Following Malusi Gigaba's increase of VAT to 15%, a panel was appointed to find ways to counteract the effects of the rising tax on the poorest South Africans. One of their proposals was to expand the VAT-exempt list.
In other words, the zero-rating of food staples is an attempt to ease the effects of inflation and help predominantly lower income South Africans, who are the hardest hit by rising costs of living.
The newly VAT-exempt items are predicted to cost the state R1.2 billion in lost tax revenue, but Mboweni said it was worth it, as the move would "target low-income households and restores the dignity of our people."
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