13 November 2017

South Africa: Bread Tax - Healthier Brown Bread Could Cost 14 Percent More Next Year

analysis

Consumers can expect to pay more for whole-wheat bread if proposed changes to the Tax Law Amendment Act are adopted. It's the latest item to be targeted for taxing. But is government simply going after "soft targets" rather than dealing with bigger issues of corruption? By NKATEKO MABASO.

In his Budget speech delivered in February, former Finance Minister Pravin Gordhan announced that there would be technical changes to the Tax Law Amendment Act. It has now come to light that these technical changes will result in VAT being charged on some types of brown bread that were previously zero-rated.

What this means is that subclasses of brown bread which include high-fibre brown bread, high-protein brown bread and brown health bread (the healthier bread options) will now have VAT added to their retail price.

Currently whole wheat high fibre brown bread is priced at R16.99 at Woolworths. With a 14% VAT the price jumps to R19.36.

The VAT Act provides for the supply of certain foodstuffs to be zero-rated. This means that consumers can buy these food items at a price inclusive of 0% VAT instead of paying the standard rate of VAT levied at 14%. The VAT Act contains a...

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