Livestock farmers have welcomed the government’s recent decision to scrap the 15 per cent value-added tax (VAT) on live animal sales.
Presenting the 2024 mid-term budget policy review last week, Finance, Economic Development and Investment Promotion Minister, Mthuli Ncube, said 85 per cent of live animals were sourced from smallholder farmers, most of whom are ineligible for VAT registration, which means that the tax had no economic benefit to the country.
Ncube also noted that due to the El Nino-induced drought there had also been a decline in demand for livestock products.
Livestock farmers say the removal of 15 per cent VAT on live animal sales will lead to better-organised markets and improved profitability, ultimately contributing to the overall development of the agricultural sector.
Speaking to the Chronicle, prominent Esigodini farmer, Obert Chinhamo of Biano Simmentals, said they have been lobbying the Government through various platforms to remove VAT, arguing that it pushed downward the prices of livestock since it was effected in January. Said Chinhamo:
It is a very good move and as farmers we have been lobbying through various platforms to have the VAT issue reversed and we are grateful to the listening ears.
The buyers obviously with added VAT were pushing the cost to farmers and so, to a farmer, it meant we were paid a lower rate by 15 per cent or more.
So, if we retain the US$0,15 per dollar it means a significant amount is coming to the farmer…
We have the Beef Producer’s Society, Livestock and Meat Advisory Council (LMAC) and farmers’ unions. All have been actively lobbying on behalf of farmers.
Last week, Ncube proposed the exemption of VAT on the sale of live animals to restore demand for meat while at the same time promoting formal trade in the livestock sector.
During the 2024 National Budget presentation in November 2023, Ncube announced that standard VAT increased to 15 per cent from 14,5 per cent effective January 1, 2024. This prompted an increase in the prices of meat products.
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