By Daanyaal Matthews
President Cyril Ramaphosa has promised to add more products to the VAT free list, including bread, maize meal, and other products that will not be taxed, thus lowering their prices, while also relooking at the structuring of the fuel price levy. While civil organizations have applauded this, there is still a question of whether it is sufficient and what more needs to be done.
Isobel Fyre, Executive Director of Studies at the Poverty and Inequality Institute (SPII), has argued that while this decision has been welcomed, it is indicative of troubling truths that the government is aware of the larger problem and that this introduction is simply not enough to curtail that issue, stating:
“Our position is, firstly, that it seems that this is a populist response to a big problem. We know, for instance, that VAT is a regressive tax because the middle class pays the same as the poorer people. So many people argue that if you exempt more people, then the richer people get the same relief. Would it not be better to take that same amount that you would give back, that the Fiscus would not be raising by the tax exemption, and give that back to poor people directly through increased social grants?”
The matter of social grants is always contentious, primarily because the increases are never enough to satisfy the needs of the poor and the demands of civil organizations, while further increases would, by the argument of some, not be fiscally viable for the state overall and merely cement a culture of a nanny state rather than a state that facilitates more employment. One argument that has been at the core of tackling poverty has been job creation, a means of ensuring that the masses are less reliant upon the state for their day-to-day existence but also ensuring that the dignity of the poor is retained rather than diminished through handouts. However, for Fyre, the decision on what goods would be VAT exempt creates a paternalistic scenario that precludes the dignity of the poor by deciding what is valuable for the impoverished in our society.
“One can argue it’s a good initiative, but it’s also quite paternalistic. It’s saying to poor people in poor households, you don’t have enough money, but we’re going to decide how your relief comes to you rather than saying to households, here is additional money; now you decide your priorities,” said the social activist.
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