According to a news report by E News Channel Africa (ENCA), Treasury asked the chair of the Davis Tax Committee, Judge Dennis Davis, to establish an independent panel to review the existing list of zero-rated VAT items.
Judge Davis and the Minister of Finance, Nhlanhla Nene appointed SALDRU Research Associate, Prof. Ingrid Woolard, as the head of an independent panel comprising prominent experts.
Minister Nene seeks to expand the basket of VAT-free products for South Africans. VAT increased from 14% to 15% on 1 April 2018. The minister is keen to ensure that the one percent increase is not regressive.
The panel will “consider the most effective way to mitigate the impact of the increase in the VAT rate on poor and low-income households. The review will consider expanding the list of basic food items that are VAT zero-rated, and also consider how specific expenditure programmes can be improved to better target poor and low-income households (e.g. National School Nutrition Programme, food stamps etc.).”
There are currently 19 VAT free items in South Africa.