In an effort to rejuvenate the economy and address pressing societal issues, the CGCSA remains committed to working alongside the government, advocating for sound fiscal policies and targeted interventions that directly benefit South Africa's most vulnerable population segments.
Image: File.
The Consumer Goods Council of South Africa (CGCSA) expressed its optimism regarding the recent national budget, perceiving it as a progressive strategy to stimulate economic growth and structural reform.
The council said that central to this approach is Operation Vulindlela, a government initiative aimed at accelerating reforms while maintaining fiscal restraint and investing in critical infrastructure.
The removal of planned tax increases is expected to enhance household incomes, consequently benefiting the retail and consumer goods sectors through increased consumer spending.
This adjustment is projected to ripple through the economy, potentially broadening the government's revenue base via elevated tax receipts, which is vital for job creation and poverty alleviation.
“The economic recovery needs to be sustained by, among other interventions, delivering on government’s promise to accelerate infrastructure investment, particularly focused on roads, water, renewable energy, and logistics, especially at Transnet," said CGCSA representative Zinhle Tyikwe.
"Transnet is critical to the efficiency of South Africa’s export trade.”
CGCSA, however, expressed disappointment regarding the absence of a plan to expand the list of VAT zero-rated basic foodstuffs.
This decision leaves vulnerable households, particularly those in the lowest income brackets, grappling with severe financial strain.
High transport and electricity costs have eroded purchasing power, further complicating access to essential food items.
"The persistence of food insecurity and malnutrition among vulnerable groups, including children, pregnant women, and the elderly—underscores the urgency of targeted interventions," Tyikwe added.
“Expanding the VAT zero-rated list of foodstuffs would provide direct relief to low-income households, supporting national health and nutrition priorities while enhancing equity in the tax system,” Tyikwe said.
The CGCSA added that it long advocated for stable excise tax policies and has acknowledged the recent adjustment of excise duties in line with inflation, which demonstrates government engagement with the sector's concerns.
Tyikwe cautioned that the ongoing increase in excise taxes could inadvertently bolster the illicit economy.
This trend could push consumers toward unsafe counterfeit goods, thereby jeopardising legitimate businesses and diminishing governmental revenue streams.
“The excise duty increases announced in the 2026 Budget Speech will inevitably raise the cost of alcohol, tobacco, and vaping products/ While we welcome the relief provided to consumers through tax bracket adjustments, these hikes risk fuelling illicit trade, which undermines businesses and threatens consumer safety,” Tyikwe said.
In response to the rising threats posed by illicit trade, CGCSA has emphasised the necessity of employing GS1 standards to reinforce traceability and compliance within supply chains.
These standards are designed to enhance product tracking and authenticity, aiding in the prevention of counterfeit goods from infiltrating legitimate markets.
“With excise increases raising incentives for smuggling, GS1 standards offer a practical solution to enforce compliance, protect consumers, and ensure government revenue collection is not undermined,” Tyikwe said.
CGCSA further urged the government to alleviate regulatory burdens that strain businesses.
They seek collaborative efforts with the government to avert unintentional consequences from policies that may hinder industry growth.
"We want to work with government, particularly on regulatory formulation, to ensure that restrictions, such as those imposed on milk and dairy exports, do not exceed international standards. Current local regulations on FMD vaccines misalign with guidelines from the World Organization for Animal Health (WOAH), creating unnecessary barriers and undermining South Africa’s competitiveness,” Tyikwe stated.
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