A new submission is being prepared to be presented to National Treasury in mid-November for the removal of the 15 VAT from chicken imports.
The benefits to poor people will be the focus of the submission, according toCharles de Wet, tax executive at law firm ENS Africa, who is preparing it on behalf of the SA Poultry Association and the Association of Meat Importers and Exporters.
In an interview with FairPlay, De Wet said the submission was nearing finalisation, and while some details might still be changed, the application is likely to argue for the removal of VAT from all frozen bone-in chicken, and from all chicken offal, fresh or frozen. Offal includes chicken feet, heads and livers.
De Wet added that these were the chicken products favoured by low-income households. Additional research was being done on the purchasing preferences of poorer people, and the likely effect on their product choice if removing VAT made chicken products cheaper.
The application will not include cooked chicken, or value-added products such as crumbed, marinated or spiced chicken pieces. Tinned chicken will not make the list, because it is cooked.
When President Cyril Ramaphosa opened parliament in July, he committed government to expanding the number of essential food items exempt from VAT as a pro-poor measure. De Wet said that the application for VAT-free chicken was in line with Ramaphosas undertaking.
This week, he said the government of national unity would be judged by what it had done for poor people, said De Wet.
Chicken is South Africas main source of meat protein, especially in lower-income households, making up 66 of all meat consumed in the country.
While the estimate of the revenue lost had yet to be finalised, De Wet said it would be less than R5 billion, and probably closer to R4bn. Even R5bn would be a tiny proportion of the tax take about 1.1 of the R426bn VAT collection in 2024, and 0.2 of the total tax take of R1.7 trillion.
In addition to the benefits for poor people, removing VAT from chicken would lead to the growth of the local poultry industry, which would result in increased tax revenues, he said, adding that he did not expect a repeat of the procedure followed in 2018, when an expert panel was appointed to review the basket of VAT-exempt goods. His expectation is that the Treasury will review the application and make a recommendation to the minister of finance.
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