2015-09-30 17:35:00

South African Bishops’ conference calls for tax reform that protects the poor


As the South African government reforms its tax structure to enable it collect more revenue for social services and other programmes, the Justice and Peace commission of the Southern African Catholic Bishops' Conference (SACBC) has called on the Government in SA to adopt a model that does not hurt the poor.

Here below is a full statement released by the SACBC’s Justice and Peace Commission

SACBC Justice and Peace commission calls for a model of financing universal health coverage that does not hurt the poor.

The Justice and Peace Commission has asked the government not to increase VAT as the South African government seeks ways of raising more funds so as to finance the universal health coverage and other social programmes.

The commission was responding to the first interim report of the Davis Tax Committee, an advisory committee set up by the government to make recommendations for the tax reforms. 

Commenting on its submission, Bishop Gabuza, the chair person for the commission, believes that it is possible to develop a more transformative and distributionary tax system for South Africa.

“We support government efforts to expand the tax base and increase revenue collection so as to finance the National Health Insurance and other social programmes.  This should however be done through a progressive tax model, and not through VAT which is regressive and affects the poor more than the rich.  We call on the government to assess its tax reforms in terms of their impact on the poor.”

Instead of increasing VAT to finance universal health coverage and other social programmes, the commission has called for tax increase on the super-rich which would raise “an additional income of Rand 9,22 billion for the government, which is approximately equal to an increase of 0,5 percentage point in the VAT rate.”  The review of the mining tax should also be considered.

The commission also took issues against the Davis Tax committee for recommending that the zero rated basket, which provides inflation protection on food prices that are consumed by the poor, be eliminated. In recommending the elimination of the zero rated basket, the Davis tax committee had argued that the intended social goals of zero rating of food items could be achieved more efficiently through the spending side of the budget.

The commission disagreed with this argument.  “We are as yet to see social transfer interventions that comprehensively and effectively address the food insecurity problem and ensure adequate nutrition for the poor in South Africa.  Until we see this realised through the spending side of the budget, we shall continue to stand in solidarity with the working poor and the unemployed and argue for extensive zero rating.”

Instead of eliminating the zero rated basket, the commission called on government to establish a mechanism for periodic review of zero rated basket to ensure that it is optimally targeted towards the poor and accurately reflects the consumption and spending habits of the poor.    The commission also believes that the mechanism for periodic review would of necessity opens room for extending the zero rated basket in order to help the poor. 

“The practice of regular review of the zero rate basket should of necessity open the door for a possible periodic changes in the composition and number of items to feature in the zero rate basket.  In the light of the periodic review mechanism, we therefore submit that the extension of the zero rating be considered in tandem with the changes in the consumption patterns of the poor.”

This is a contrast to the position of the Davis Tax Committee which discouraged extension of the zero rated basket.

(Fr. Stan Muyebe, Coordinator, SACBC Justice and Peace Department)

e-mail: engafrica@vatiradio.va

 








All the contents on this site are copyrighted ©.