Scrap basic food tax Govt told

• By Uaueza Kanguatjivi

ECONOMIST Omu Kakujaha-Matunda has warned that Russia’s exit from the Black Sea Grain Deal will have a significant influence on pricing in developing countries across Africa, particularly Namibia, necessitating the elimination of levies on food goods such as beans, cooking oil, fat, bread, and cake flour.

On Monday, the Kremlin announced the suspension of an agreement with Ukraine that allowed both countries to continue exporting grain in revenge for an attack on a bridge connecting the Crimean Peninsula to its territory.

Kakujaha-Matunda cautioned that such a move by Russia, the world’s largest wheat exporter, will definitely wreak havoc on inflation in Sub-Saharan Africa, notably on grain imports and fertilisers.

“It is not only grain shipping but also agricultural inputs like fertilisers. As a result, both grain imports and domestic food production could put pressure on food costs. Food insecurity will potentially spark political turmoil in Africa. Food price increases will keep inflation high, triggering another round of interest rate hikes. The outcome of the South African harvest could save the situation for Namibians, but Namibia would face increased inflation if Russia refuses to budge,” said Kakujaha-Matunda.

The former senior lecturer at the University of Namibia said consumers who are dealing with a spike in inflation may be worse off in the long run, as prospects for a renewed tax exemption for food products remain bleak.

“Yes, government should cushion the customers. However, with the fiscus so stressed, I don’t believe they have the fiscal space to act. There are several food items that are VAT exempt/zero rated. I don’t believe government wants to add more food items to the zero-rated list,” he stated.

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