2014 Customs Acts - Update In the Finance Minister’s 9 051-word 2018 Budget Speech of 21 February, the word ‘customs’ appears only three times. Once in reference to the revenue proposals, and twice in the confusing sentence “Government will also take steps to implement the customs modernisation programme currently implemented by Sars, to give effect to the new customs and excise legislation passed in 2014.” If you are not confused, you do not have all the facts. Tax Proposals 2018 Four of the seven tax proposals, announced to generate a supposed additional R36 billion in tax revenue for 2018/19, relate to customs and excise, namely (i) An increase in the ad valorem excise duty rate on luxury goods from 7% to 9%; (ii) 52 cents per litre increase in the levies on fuel, made up of 22 cents per litre for the general fuel levy and 30 cents per litre for the Road Accident Fund (RAF) levy; (iii) Increases in the alcohol and tobacco excise duties of between 6% and 10%; and (iv) Increases in the plastic bag levy (50%), the motor vehicle emissions tax and the levy on incandescent light bulbs. Spotted anything of interest? The ‘excise duty’ and ‘excise duties' designations are not correct in the true economic sense of the word, as it includes customs duty. The demand for luxury goods is perfectly price elastic, which means that the anticipated revenue increase may well not be realised. The increase in the levies and excise duties on fuel, alcohol and tobacco products, which are not elastic in demand, should in all likelihood realise an increased revenue. Environmental levies have become purely fiscal measures. In other words, the government uses them to collect revenue rather than to repair the damage caused. More tax on the horizon On 1 January 2019 a carbon tax will be imposed, which is apparently to assist South Africa to meet its climate change commitments to reduce our carbon emissions. I fear that it will be yet another fiscal measure. Customs taxes performance Customs duties realised less than R3.6 billion of their projected budget, specific excise duties less than R2.6 billion, fuel levy more than R438 million, and ad valorem excise duties more than R157 million. SACU payments Payments to the Southern African Customs Union (Sacu), projected at R48.3 billion in 2018/19, decline to R46.3 billion in 2019/20. As the economy recovers and imports rise, Sacu payments are expected to increase to R60.1 billion in 2020/21. In 2016/17 Sacu payments were R39.5 billion, and last year R55.9 billion, a 41.8% increase. Duty Calls Watchlist Comment on the proposed increase in the customs duty on phosphoric and polyphosphoric acids is due by 16 March. Regional roadshows on the Sugary Beverages Levy are scheduled for March.
