Nhlanhla Nene to review zero-rated food basket

Former Finance Minister Nhlanhla Nene.
Former Finance Minister Nhlanhla Nene.
Image: Gallo Images

Government is considering adding more basic goods to the list of zero-rated foodstuffs in a bid to mitigate the impact of a value-added tax (VAT) hike on poor people.

Communications Minister Nomvula Mokonyane said yesterday the measure was discussed by cabinet at its meeting in Cape Town on Tuesday.

Former finance minister Malusi Gigaba provoked a public outrage when he announced during his Budget speech last month that VAT would be increased for the first time since 1993, from 14% to 15%, a move which has been roundly slammed by opposition parties and the governing ANC's alliance partners, the SA Communist Party and trade union federation Cosatu.

The organisations opposed to the VAT rise, which government said was expected to increase its coffers' revenue by R22-billion, have vowed to campaign for its reversal.

Mokonyane said the cabinet has now mandated new Finance Minister Nhlanhla Nene to lead the process of reviewing the zero-rated food basket.

"What was raised [at the meeting] was that we definitely need to reflect and also unpack and give more clarity around the issues of VAT. One of the key considerations was the addition of items that must also be zero-rated," she said.

Meanwhile, she dodged questions related to her previous role as minister of water and sanitation, after parliament's standing committee on public accounts accused her of running down that department.

Scopa on Tuesday called for a full parliamentary inquiry into the finances of that department after it took a R2.9-billion overdraft with the Reserve Bank after it exhausted its budget. 

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