It’s time to rework your monthly budget. This is due to the upcoming Value Added Tax (VAT) increase, which takes effect from 01 May 2025. However, parliament has not provided clarity nor made the necessary law amendments on the VAT Act. This is to stop retailers from increasing prices on essential food items, also known as the ‘zero-rated’ items.

These zero-rated food items include;

• Brown bread
• Eggs & milk
• Maize meal
• Samp
• Rice
• Fruits and vegetables
• Chicken heads, feet, giblets and cleaned intestines.

Tax expert Des Kruger spokes to News24 and said, ‘’adding items to the zero-rated food basket requires Parliament’s approval via amendments to the VAT Act.’’

However, due to timing constraints, parliament might not pass these amendments before 01 May 2025. This means that retailers will go ahead with the increase without any relief to basic foods.

Retailers such as Pick n Pay have raised concerns about the costly process of updating its labels as this requires human resources. They need to train staff, and coordinate with suppliers ahead of the VAT increase. Other issues include drafting new commercial agreements, master data to pricing systems, point-of-sale software, and online platforms.

The minister of finance Enoch Godongwana has also announced three things that might soften the blow of the VAT increase.

• Social grants would be increased;
• The fuel levy (charged on petrol and diesel) would stay the same (rises in the fuel levy affect taxi users as well as those who own cars); and
• The list of goods on which VAT is not paid (zero-rated goods) would be lengthened.

We will await an update from treasury or parliament about the approval of the zero-rated food items.