SUBMISSION BY THE BUDGET JUSTICE COALITION ON THE REPORT OF THE PANEL OF EXPERTS ON MITIGATING THE NEGATIVE EFFECTS OF THE VAT INCREASE FOR POOR AND LOW INCOME HOUSEHOLDS
This submission is made in response to the call by National Treasury for public comment on the report by the Panel for the review of the current list of zero-rated VAT items.
As raised in our submissions to Parliament on the 2018 Budget and the draft Rates and Monetary Amounts Amendment Bill, we are concerned about the negative effects the increase to the VAT rate is having on poor and low-income households. We are also concerned by the simultaneous increases in the fuel levy as this has resulted in higher transport costs – impacting negatively on food and public transport costs. As a result poor and low income households are struggling to afford nutritious food and transport to school, work and health facilities. The harsh spending cuts prescribed in the technical guidelines for the Medium Term Expenditure Framework will exacerbate the situation.
In this submission we again re-iterate our objection to the February 2018 decision to increase VAT and call on Treasury and Parliament to reconsider this decision. If Parliament ultimately agrees to the VAT increase by the passage of the Rates and Monetary Amounts Amendment Bill, we call on National Treasury and Parliament to implement comprehensive mitigating measures that recognise the full extent of the financial crisis being experienced on a daily basis by the majority of poor and low-income earners.