South Africa’s President Announces Expansion of VAT-Exempt Food Items

South Africa’s President Announces Expanded VAT Exemption on Essential Food Items

As South Africa faces high poverty levels and escalating living costs, the Government of National Unity (GNU) is set to broaden the list of essential food items exempt from Value Added Tax (VAT). This initiative is part of a broader strategy to alleviate financial pressures on South African households.

President Cyril Ramaphosa revealed this plan during his Opening of Parliament Address in Cape Town. He stated that the GNU will conduct a thorough review of administered prices, including the fuel price formula, to identify opportunities for price reductions. The aim is to make essential goods more affordable and provide relief amidst rising costs.

Ramaphosa highlighted the GNU’s commitment to three strategic priorities over the next five years:

1. Driving Inclusive Growth and Job Creation
2. Reducing Poverty and Addressing the High Cost of Living
3. Building a Capable, Ethical, and Developmental State

The President emphasized that a comprehensive strategy to alleviate poverty is crucial for supporting the most vulnerable. “Even as many companies report large profits, millions of South Africans are struggling with increasing prices,” he remarked.

In his address, Ramaphosa also discussed the government’s efforts to support the unemployed, including the Social Relief of Distress (SRD) Grant introduced during the COVID-19 pandemic. He announced plans to transform this grant into a more sustainable form of income support, aiming to address income poverty effectively.

The President stressed the importance of linking social assistance with other forms of support to help lift people out of poverty. He also emphasized the role of quality education in reducing poverty and fostering economic growth.

Addressing asset poverty, Ramaphosa noted that providing title deeds and subsidized housing can help individuals improve their economic status. He pointed out that income poverty is a significant factor contributing to overall poverty.

To combat poverty and create jobs, the administration will focus on processing minerals domestically rather than exporting raw commodities. “We will pursue a smart industrial policy that enhances our economic competitiveness and encourages businesses to expand exports and generate jobs,” said Ramaphosa.

The government will also collaborate with stakeholders to develop Master Plans aimed at growing key industries, boosting investment, creating jobs, and promoting economic transformation.

This multifaceted approach is designed to address the pressing economic challenges South Africa faces and to build a more inclusive and sustainable future for its citizens.