Improving the targeting of zero-rated basic foodstuffs under value added tax (VAT) in South Africa - An exploratory analysis
Stellenbosch Working Paper Series No. WP07/2012Publication date: 2012
Author(s):
[protected email address] (Department of Economics, University of the Western Cape)
[protected email address] (Department of Economics, University of Western Cape)
VAT without any exemptions or zero-rating is regressive. Since the inception of VAT in South Africa, there has been an ongoing debate around the issue of zero-rating to alleviate the burden on poor households. This paper uses vegetables as an example and conducts tax incidence analyses to compare the relative burden of VAT on vegetables for various income groups. It finds that differential treatment of the zero-rating of VAT on various categories of vegetables could be beneficial in terms of relative equity gains. It is suggested frozen vegetables remains zero-rated, whereas canned vegetables and some fresh vegetables items be zero-rated.
JEL Classification:H2, H24
Keywords:Value added tax, expenditure patterns, regressivity, zero-rating, equity gain, optimal targeting, basic foodstuffs, sub-categories of vegetables, South Africa
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Monday 28 July 202512:00-13:00
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Topic: "Two competing approaches in South African competition policy: merger control and anti-cartel enforcement over the past 30 years"
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Topic: "Economic History: TBC"
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18 Jul 2025 Encouraging data, but messy politics while US tariff deadline loomsThe big global data prints of the week came on Tuesday, with better-than-expected Chinese GDP growth for Q2 and US core CPI coming in lower than expected, but still (finally) reflecting some signs of tariffs being passed on to consumers. Locally, the uptick in mining production and retail sales was positive for Q2 GDP dynamics. In addition to the data,...
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