Question NW2922 to the Minister of Finance
04 October 2023 - NW2922
George, Dr DT to ask the Minister of Finance
(1)Whether, with regard to the cost-of-living crisis that is currently exhibited most notably by the upward spiralling high food prices that are squeezing the average South African household, he intends to reconsider the position he outlined during questions for oral reply on 21 September 2022 in respect of the proposal by a certain political party (details furnished) to expand the zero-VAT rated basket of food items as a direct intervention; if not, why not; if so, what are the relevant details; (2) with regard to the announcement made by the Minister in The Presidency, Ms K P S Ntshavheni, that the Economic Cluster has been instructed by the President to develop a food security plan of action, what action is being taken by the National Treasury to relieve food insecurity of households in the Republic?
Reply:
- The position of the Minster has not changed since the last oral reply. As indicated then, zero-rating of specific foodstuffs provides a larger proportional benefit to the poor (i.e. progressivity is enhanced). Overall, goods have a progressive impact and a strong equity-gain ratio – poor people consume a relatively high share of zero-rated items. Nevertheless, the analysis of the independent panel in 2018 indicated that extending zero-rating to further food items would be inefficient, since high-income households tend to benefit more from such measures.
- We acknowledge the importance of the agricultural sector in tackling the issue of food insecurity which can both be addressed by increasing availability of food and affordability of food. National Treasury provides fiscal support to departments to support the agricultural sector. The fiscal support for agricultural sector is determined through the budget allocations to the Department of Agriculture, Land Reform and Rural Development, as articulated in the Estimate of National Expenditure (ENE) -Vote 29 and to provinces though the Division Revenue Act, and this information is available in various provincial budgets.
- Consolidated spending allocations for agriculture and rural development, as presented in the 2023 Budget, are R27.8 billion in 2023/24, R28.6 billion in 2024/25 and R29.9 billion in 2025/26.