“Greater good” behind VAT zero-rating – Serame
Mbongeni Mguni | Monday March 6, 2023 06:00
Besides these products, the ministry plans to zero-rate VAT on cooking oil, Liquefied Petroleum Gas, white bread as well as ginger and leguminous vegetables. Under amendments to the VAT Act due in Parliament soon, a range of agricultural inputs that were previously VAT exempt will be moved to zero rating, as will condoms.
Private health services will also become VAT exempt.
Briefing the media on Wednesday, Serame said intensive discussions had taken place on the list of goods to be included in the VAT amendments.
“It has to make sense and we look at the list and propose items, then do an assessments that also examines how much we are collecting for those products,” she told Mmegi.
“We look at the revenue that we will be forgoing and also the greater good for society",Serame added.
Serame said tax authorities “argued a lot” about what should be included or excluded from VAT zero rating or exemptions and had to strike a balance between making basic commodities affordable to low income earners and government’s tax collections.
“For fruit and vegetable zero rating, we zero rated them because we are trying to promote healthy living and for the private health services, this could result in less of a burden on public health facilities,” she said. “The greater good for society should be the guide,” she stated.
The latest developments will be welcomed by Batswana who have long questioned why basic necessities such as certain food products, baby items and sanitary wear should be charged VAT.
Tax experts have however cautioned that exempting rather than zero rating private health services from VAT could ultimately increase the cost to patients, as the affected practitioners will be unable to recoup any VAT they pay on goods and services supplied to them.