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Here's why you should back the National Consumer Forum: It wants to make electricity Vat-free!

by , 21 January 2013
The suggested electricity price hike of 110% over the next five years is nothing but an added financial stress, especially as you can't claim the Vat portion back from SARS ... yet. There's hope that the National Consumer Forum will put pressure on government in this regard, but chances are slim.

IOL reports that The National Consumer Forum has called Eskom a 'parasitic institution', and has asked for electricity to be made Vat-free, like brown bread and milk.

The energy regulator is currently holding public hearings on Eskom's proposed revenue application multi-year price determination for 2013/14. The increase would take the price of electricity from 61 cents a kilowatt hour in 2012/13 to 128 cents a kWh in 2017/18 - more than doubling the price over five years.

An average annual increase of 13% was intended to meet Eskom's needs over five years, plus 3% to introduce new independent power producers.

Here's how the National Consumer Forum is putting pressure on SARS to make electricity Vat-free and lessen the effect of the price hike!

Imraahn Ismail Mukaddam, the forum's Western Cape co-ordinator, said: 'Stop using electricity for tax collection, electricity is an essential product and should be Vat-free. The (Nersa) panel should do an affordability assessment before any increase is considered.'

Let's hope the National Consumer Forum makes an impact, as the electricity price hike would be crippling for many businesses. Unfortunately, if your company provides staff housing, such as houses, flats, hostels or boarding houses that they rent from you, you can't even claim the Vat portion of their electricity usage back, as this is seen as used for the making of exempt supplies. So while any rental income you'd receive from employees is exempt from Vat, you won't be able to claim back the Vat portion for electricity use.

But there are lots of surprising things your business can get the Vat back on. Find out exactly what you can and can't claim money back from SARS on by ordering our Practical Vat Loose Leaf Service!

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