Examining the Impact of VAT-Free Chicken and Social Grants on Low-Income Households
As the cost of living in South Africa continues to rise, the debate between increasing SASSA grants and removing Value-Added Tax (VAT) from essential food items like chicken has taken centre stage. Low-income households, burdened by food insecurity and malnutrition, could see transformative benefits from these initiatives. But which solution offers more substantial relief?
The Proposal for VAT-Free Chicken
A recent proposal, led by the SA Poultry Association (Sapa) and the Association of Meat Importers and Exporters (AMIE), calls for VAT exemption on specific chicken products. Compiled by ENS, a leading law firm, the proposal highlights the economic and nutritional benefits of making chicken more affordable for low-income households.
Chicken Products in the Proposal
The submission suggests removing VAT from:
- Frozen bone-in chicken
- Whole frozen chicken
- Drumsticks, wings, and leg quarters
- Fresh and frozen chicken offal, including livers, heads, and feet
Cooked chicken and value-added products, such as spiced or crumbed items, are excluded due to their appeal to higher-income groups.
Nutritional and Economic Benefits
Chicken is one of the most affordable protein sources, rich in essential nutrients like iron, vitamin B, and magnesium. The proposal estimates that removing VAT from select chicken products could save households R83.18 per month, based on the Pietermaritzburg Economic Justice and Dignity group’s October 2024 Household Food Basket report.
Additionally, chicken is the cheapest protein option compared to beef, pork, and eggs, with chicken livers costing as little as 23 cents per gram of protein.
Social Grants as an Alternative
While social grants, like the R370 SASSA SRD grant, provide direct financial assistance, the proposal argues that they may not always be effectively deployed due to administrative inefficiencies and potential mismanagement of funds. Expanding the basket of VAT-free essential foods, including chicken, offers a more immediate and sustainable impact on food security.
The Fiscal Trade-Off
Exempting VAT on chicken products would result in an estimated revenue loss of R4.9 billion annually, which represents only 0.27% of the government’s projected revenue. Advocates argue that this loss is negligible compared to the potential benefits, including reduced malnutrition and improved quality of life for millions of South Africans.
Which Offers More Relief?
Both solutions have merits:
- SASSA Grants: Provide financial flexibility but may be diluted by inefficiencies.
- VAT-Free Chicken: Offers direct savings and ensures access to essential nutrition, particularly for households struggling with food insecurity.
While both SASSA grants and VAT-free chicken have their advantages, the latter provides an immediate and targeted solution to combat malnutrition and reduce the financial strain on low-income households. By removing VAT on essential chicken products, the government could significantly improve the lives of millions, ensuring access to affordable protein and better nutrition.
Also read: School Fees Exemption and Debt Collection: A Complete Guide for South African Parents
