The ‘Poorest-
Performing Tax
Category’
On 25 October the Finance
Minister presented his
Medium-Term Budget Policy
Statement (MTBPS). How
many times did the Minister
mention ‘customs’ in his
speech? Not once.
This is most interesting,
particularly in the context of
the reference on page 21 of the
MTBPS document, where,
under the heading ‘Revenue
performance and outlook’,
it states ‘In 2016/17, the
largest shortfall against the
2017 Budget estimate was in
customs duties, which slowed
in tandem with falling import
growth.’
This seems in contradiction
to, ‘Growth in capital
investment continued to draw
in imports, attracting valueadded
tax and customs duties.’
which appears under the
headline ‘Fiscal outlook’ on
page 4 of the MTBPS. Adding
to the contradiction, under the
headline ‘Factors contributing
to poor revenue performance’,
it explains ‘Revenue weakness
reflects a number of economic
factors: ‘Weak investment and
household consumption led to
a sharp contraction in imports
in 2016, affecting VAT and
customs duties.’
To put the customs duty
shortfall in context, consider
the table ‘Gross tax revenue’
– for 2016/17 the R1.9 billion
was due to a budget of R47.5
billion and a R45.6 billion
outcome. Regardless of the
outcome, for 2017/18 the
budget was set at R52.6
billion, then a mere six months
later it was revised down to
R47.2 billion, a difference
of R5.4 billion. This revised
customs duty revenue is then
less than that for 2016/17.
That there are serious
problems in customs is
abundantly clear. If you have
not done so already, consider
the neglected Southern
African Customs Union (Sacu)
payments, ‘South Africa’s
customs duty – a major driver
of payments to Sacu – was
the poorest-performing tax
category in 2016/17.’
Sars Annual Report
delay
On 27 October fin24.com
reported that members
of Parliament’s Portfolio
Committee on Finance had
expressed concern over a
potential lack of oversight of
the South African Revenue
Service (Sars) due to the late
filing of its financial report.
The delay relates to a
dispute with the auditorgeneral
(AG) on the
interpretation of the Sars
Act relating to the finance
minister approving the
terms and conditions
of employment for Sars
managers. According to The
Daily Maverick’s investigative
unit, Scorpio, the AG gave
the Sars Commissioner
an ultimatum to declare
controversial bonus payments
to his executive committee as
irregular expenditure, or it
would receive a qualified audit
opinion. It is understood that
Sars never received a qualified
audit.
Sars accordingly indicated
that it would not be able to
present its annual report
to Parliament at the end of
November.
Sars also has not published
its Strategic Plan 2017/2018-
2021/2022.
Duty Calls’ Watchlist
Comment on (i) the proposed
rebate provisions on ordinary
customs duties and safeguard
duties applicable to flatrolled
products of other alloy
steel; (ii) the rebate provision
on safeguard duty for the
importation of certain hot
rolled steel; and (iii) the
rebate provisions on ordinary
customs duties and safeguard
duties applicable on primary
flat steel not manufactured in
the Southern African Customs
Union is due by 3 Nov.
