SOUTH AFRICA – The Red Meat Producers Organisation (RPO) has intensified its efforts to secure a place for specific meat products on South Africa’s zero Value Added Tax (VAT) list, following recent discussions around food affordability.
This move aligns with initiatives by the South African Poultry Association (SAPA) and the Democratic Alliance (DA), who have been advocating for zero VAT on individually quick frozen (IQF) chicken portions.
President Cyril Ramaphosa’s pledge to review VAT-exempt food items, aimed at alleviating the financial burden on low-income households, has further fueled the debate.
Dr. Frikkie Maré, CEO of the RPO, stresses that any discussion on zero VAT for food must balance both affordability and nutritional value.
While he acknowledges that the existing VAT-exempt list covers essential food groups, Maré questions its effectiveness in addressing widespread hunger and malnutrition.
He argues that comparing IQF chicken to other meat products can be misleading, as factors like brine and bone content distort its perceived affordability.
Consequently, the RPO is pushing for the inclusion of more accessible meat options such as tripe, trotters, and red offal in the zero VAT category.
Research commissioned by the Red Meat Research and Development South Africa underscores potential market disruptions that could arise from zero VAT on selective meat products.
For instance, exclusively removing VAT on chicken could boost consumer demand, potentially driving up imports and undermining the local poultry sector.
Additionally, the long-term effects on consumer behavior remain uncertain, with initial price reductions possibly leading to increased consumption and eventual price hikes.
The RPO cautions that such a tax policy shift could have adverse effects on the already struggling red meat industry.
A shift in consumer demand towards chicken, driven by zero VAT, could exacerbate the challenges faced by red meat producers.
To counter these risks, the RPO advocates for a broader inclusion of meat products in the zero VAT list, aiming to preserve price stability across the board.
Furthermore, the RPO raises concerns about the current ad valorem import tariffs on both poultry and red meat, suggesting that if meat is deemed a basic food item, protectionist tariffs might become harder to justify.
Dr. Maré recommends forming a working group of government officials, nutritionists, economists, and agricultural experts to thoroughly assess the implications of expanding the zero VAT list to include various meat products.
This approach, he argues, would ensure that the benefits to consumers are maximized while minimizing potential disruptions to the livestock and meat sectors.
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