Fair Play Movement says MTBPS fails poor households on chicken VAT

Reactions to Finance Minister Enoch Godongwana’s MTBPS, tabled on Wednesday 21 October, have been mixed. According to The Citizen, the Fair Play Movement is among those who are unhappy and has called the statement “anti-poor”.

Fair Play is a non-profit group formed in October 2016. It campaigns against what it calls dumping, which means selling foreign goods in South Africa at prices below what they cost to make in their home markets.

Chicken and VAT

Fair Play founder Francois Baird said the government had once again failed to zero-rate the chicken portions most often bought by low-income households. He said this was the eighth year in a row. In his view, the move has the backing of all political parties and of President Cyril Ramaphosa, is affordable, and would help growth and jobs.

The group was one of those that pushed for chicken portions to be added when the list of VAT-exempt foods was widened in 2025, but that did not happen. Its argument is that poorer households buy most of these portions and that chicken is the least expensive protein available to them.

Baird welcomed the R1.6 billion set aside for child nutrition to fight child stunting. He said, however, that VAT-free chicken would also help families with malnourished children. Millions of people, he said, will keep paying an extra 15% on every chicken portion and pack of chicken liver.

He also pointed to rising hunger, poverty and unemployment since 2018 and warned that higher petrol and diesel prices will push up food inflation. “Drop VAT on chicken, and prices will drop immediately,” Baird said.

Paraffin left out

The Citizen also noted earlier criticism of the minister over fuel relief. Earlier this year Godongwana temporarily scrapped the fuel levy on petrol and diesel but did not mention paraffin. The Motor Industry Staff Association (Misa) had urged him to extend help to vulnerable households. Misa’s Martlé Keyter said paraffin is still the main energy source for many people and that its high price will hurt struggling families.

The MTBPS again gave no paraffin relief. This month the wholesale price of illuminating paraffin is R27.27 per litre inland and R23.41 per litre in coastal areas.

Economist welcomes fuel relief

Nedbank senior research analyst Reezwana Sumad welcomed the fuel price relief at a North-West University Business School webinar on Thursday. She said oil is “well over $100 a barrel”, which explains why fuel prices have climbed over the past six months, while the rand has been fairly stable.

She expects diesel-intensive businesses, such as those in logistics, to see some relief in November from a slightly lower diesel price. Her full-year inflation forecast has moved from 4.4% to 4.3%. She said this could let the Reserve Bank hold off on raising interest rates while it watches inflation and oil prices.

What this means for you

• Chicken portions remain subject to 15% VAT, as the MTBPS did not change this.
• Paraffin users get no extra relief, so households that depend on it still face high prices.
• Motorists and diesel-dependent businesses may see some price relief from November.
• Lower inflation forecasts could mean interest rates are not raised soon.

This story is based on reporting by The Citizen.