2 days ago
Despite VAT exemption, some zero-rated food prices increased in past 12 months
Despite being exempt from VAT, the prices of some zero-rated foods increased by 4.1% over the past 12 months.
The latest Household Affordability Index report, compiled by the Pietermaritzburg Economic Justice & Dignity Group (PMBEJD), found zero-rated foods in the household food basket increased by R113.66 (4.1%) from R2,775.45 to R2,889.11 in the year to June.
It tracks the prices of 44 basic foods from 47 supermarkets and 32 butcheries in Johannesburg, Durban, Cape Town, Pietermaritzburg, Mtubatuba in northern KwaZulu-Natal and Springbok in the Northern Cape monthly.
Basic food items like brown bread, rice, samp, mealie rice, vegetables and fruit are zero-rated for VAT, meaning they are taxed at a 0% rate to make them more affordable for consumers. In May certain offal and tinned or canned vegetables were added to the list.
According to the report:
in June 2024, 30kg of maize meal cost R301.28 while it cost R351.60 a year later;
a 5kg bag of samp rose from R62.11 to R73.14;
five litres of cooking oil from R149.75 to R158.65;
six cans of pilchards increased from R151.15 to R154.28; and
25 loaves of brown bread rose from R378.66 to R381.01.
The report states foods subject to VAT increased by R76.70 (3.1%) from R2,477.32 to R2,554.02.
'Twenty-two of the 44 foods in the total household food basket are subject to VAT. Foods subject to VAT make up 47% of the total cost of the household food basket. VAT on the total household food basket came to R333.13 in June,' the report said.
'This means 6.1% of the household food basket is made up of VAT. A tax of R333.13 is nearly the same cost of an average low-income household's requirement of 30kg maize meal per month.
'The total rand value of VAT on basic food stuffs is very high and removes money from the purse that could be spent on more food.'
Overall the cost of a basic nutritional food basket for a family of seven increased by 3.9% (R249.15) from R6,403.10 to R6,652.25.
Mervyn Abrahams of PMBEJD said in June families living on low-incomes may underspend on basic nutritional food by a minimum of 18%.
As financial and economic circumstances worsen, so too does household health and nutrition. The gap between what women are able to buy and what they need to buy for proper nutrition widens
Mervyn Abrahams of PMBEJD
Of the 44 foods tracked in the basket, 19 foods increased in price. Foods that increased in price by 5% or more include onions (9%) and beef (5%).
'Households living on low incomes change their purchasing patterns in response to changes in affordability conditions,' said Abrahams.
'On low incomes, women buy the core staple foods first so that their families do not go hungry and for basic meals to be prepared. Where the money remaining is short, women have no choice but to drop foods from their trolleys or reduce the volumes of nutritionally rich foods in their trolleys.'
This had negative consequences for health, wellbeing and nutrition, he said.
'As financial and economic circumstances worsen, so too does household health and nutrition. The gap between what women are able to buy and what they need to buy for proper nutrition widens.'
The report states that the national minimum wage (NMW) 'is a poverty wage — it hurts workers, it reduces productivity in the workplace, and slows down economic growth.
'The maximum wage of R4,606.40 this June when disbursed in a family of four people is R1,151.60. This is below the upper-bound poverty line of R1,634 per capita per month. Set at such a low level, the NMW works to institutionalise the low-baseline wage regime and lock millions of workers into poverty.
'Small annual increments off such a low wage base (in rand value) — and which do not reflect inflation levels as experienced by workers, nor the actual cost of worker expenses — means that workers on the NMW are getting poorer each year.
'The minimum shortfall on food for a family is 48.5%. After paying for transport and electricity, workers are left with R1,963.43. If all of this money went to food, then for a family of four it would provide R490.85 per person per month. The food poverty line is R796 per person per month.'
