More food will be exempt from VAT, fuel levy to be looked at: Ramaphosa

To cushion South Africans from the soaring cost of living, says President Cyril Ramaphosa, the government will expand the list of food items that are exempted from value added tax (VAT).

This, he said, was necessary to further protect and support poor South Africans amid rising food prices.

Ramaphosa said that the government of national unity, which comprises the ANC, the DA, the IFP, the Patriotic Alliance and the PAC, had also resolved to review the formula used to determine the price of fuel. 

Zero-rated food products include brown bread, maize meal, vegetables, milk, eggs and tinned fish. 

Delivering his opening of parliament address under the auspices of the government of national unity, Ramaphosa said companies were making large profits at the expense of millions of South Africans who were suffering from rising prices.   

Ramaphosa said the government would conduct a review of administrative prices, such electricity tariffs and municipal rates and taxes, with electricity having increased exponentially in price in the past few years.

“As the government of national unity, we will look to expand the basket of essential food items exempt from VAT and undertake a comprehensive review of administered prices, including the fuel price formula, to identify areas where prices can be reduced,” said Ramaphosa.

“And this we did for a while when prices of fuel just kept rising, we were able to find a way in which we could stabilise the price. We will seek to find ways of addressing this challenge.” 

In 2022, the National Treasury intervened to give a reprieve to motorists by reducing the fuel price by R1.50 a litre for about three months.

Ramaphosa said the high cost of living was made worse by asset poverty.

“The provision of title deeds for land and subsidised housing provides people with assets that they can use to improve their economic position. Income poverty is also one of the underlying causes of poverty,” he said.   

Ramaphosa said job creation was essential to dealing with poverty.

“We have, however, made interventions to support the unemployed through a variety of interventions including during Covid when we introduced the SRD grant which has provided a lifeline to millions of unemployed people,” said Ramaphosa. “We will use this grant as a basis for the introduction of a sustainable form of income support for unemployed people to address the challenge of income poverty.” 

The indigents policy in municipalities must be properly managed “so that the old, the infirm and the poor are able to get assistance with the payment of basic services”.

“Importantly, we will link social assistance with other forms of support to lift people out of poverty,” Ramaphosa said.

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