One of our society’s greatest flaws is the inability to actively hold politicians to account. In far too many instances, politicians make announcements in times of crises, promise to commission a study or an inquiry, which then predictably misses its own deadlines.
Recently, we have seen this from the finance minister, who promised action on the issue of the Public Investment Corp’s governance "in due course", and then promptly went silent on us. No-one complained.
The president assembled a team to look into ways of mitigating the effect of fuel price increases on society. Nothing has been heard since. In 2013, the department of basic education finally published its "norms and standards" relating to school infrastructure and set itself a deadline of 2016 for full implementation. Unsurprisingly, it missed the deadline.
The problem with zero-rating sanitary products is that the benefits will also accrue to members of society whose economic circumstances do not warrant such relief.
Bizarrely, when the department was taken to court regarding this delay it lost the court case and then decided to appeal. A week after it announced this intention, President Cyril Ramaphosa unveiled an initiative aimed at fixing sanitation in schools — the very same issue the department is planning to appeal in the courts. Remarkably, no-one at the event seemed to think it important to mention this irony to the president at the launch.
In light of this trend of commitments that are never followed up, it was refreshing to finally see the VAT report that was published last Friday. The aim was to look into the feasibility of expanding the basket of goods that are charged VAT at a rate of 0%. Historically, just 19 items qualified for this concession but, with the VAT increase from 14% to 15% earlier this year, the question of how to insulate citizens — particularly the poor — from the effect of the increase was central to the panel’s deliberations.
The panel has recommended that six additional items be included: sanitary products, school uniforms, nappies, white bread, cake flour and bread flour. A notable exclusion from the list is ordinary chicken. The panel failed to reach consensus on whether applying a zero-rating to poultry would be in line with the objectives of providing relief to citizens while also avoiding the tendency of producers to capture such benefits for themselves by not adjusting prices downwards.
As I have argued before, there is no perfect insulation from VAT, even for the items that are zero-rated. Given the fact that even the existing list of 19 items contains processed foods whose inputs are not all zero rated, it is inevitable that the VAT increase on the primary inputs will push up the exit price of the final product, even if the final product is itself zero-rated.
In the list proposed by the panel, sanitary products are perhaps the least likely to pass. While zero-rating them would amount to good politics, it might be bad economics. What makes sanitary products unique in this list is that they are used by a fraction of the population. Men, prepubescent girls and women beyond a certain age who do not use the products derive no direct benefit from the zero rating.
Those who do use sanitary pads only do so for a few days each month. If we are to advance the cause of the poor, and particularly poor women, identifying a good that has more regular daily use as an instrument for economic relief might generate better outcomes than a zero-rating on sanitary pads. The problem with zero-rating sanitary products is that the benefits will also accrue to members of society whose economic circumstances do not warrant such relief.
If we are to get the relief to the right people, making sanitary products free for the poor makes more sense.
• Sithole (@coruscakhaya) is a chartered accountant, academic and activist.
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