The prices of meat products are expected to change for Zimbabwean buyers after the government removed the value-added tax (VAT) on livestock.
Finance, Economic Development, and Investment Promotion Minister Professor Mthuli Ncube announced the development yesterday during the 2024 Mid-Term Budget and Economic Review presentation.
Government Removes VAT On Livestock
Prof Ncube said:
“In order to encourage formal trade, thus restoring demand for meat products, I propose to exempt live cattle, pigs, goats, sheep and bovine semen from VAT. Furthermore, I propose to exempt poultry meat and kapenta from VAT.”
The government raised VAT from 14.5% to 15% last year during the 2024 Budget Presentation. The change came into effect on 1 January 2024. The government had raised the VAT to increase revenue as it prepared for the El-Nino-induced drought. However, because of low disposable income, the demand for meat products lowered.
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What The Tax Reversal Means For Zimbabweans
The Chronicle reported that the January VAT increase to 15% raised the prices of meat products on shop shelves as producers adjusted to the higher cost of selling animals.
Removing VAT on live animals and specific meat products will likely reduce the prices of products in supermarkets like TM and OK. This makes meat more affordable for Zimbabwean buyers, particularly those who earn lower incomes.
However, this will likely have a negative effect on informal meat vendors, who target customers who earn less.
Slashing the VAT will also boost the livestock production sector as the cost of production will be lower. The Zimbabwe Commercial Rabbits Breeders Association (ZICORBA) applauded the statement:
“This decision is a significant and much-boost for the agricultural sector, particularly for small livestock producers.”
Initially, there might be some price variations as shops adjust to the new VAT exemptions. Producers and retailers may need time to align their pricing strategies with the new regulations. Buyers will, therefore, need to be careful of some shops that may take advantage of this to rip customers.
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