Textile industry welcomes Sars' strong-arms tactics

The SA Revenue Service (Sars) strategy for combating illicit trade in clothing and textiles is on the right track. “It contains the right elements to overcome this problem for SA producers,” Brian Brink, CEO of the Textile Federation, told FTW. He also approved of government having introduced incentive schemes (production incentives will be increasingly grant-based, thus reducing reliance on tax incentives) to boost manufacturing capacity and support job creation. According to Sars, the industry – to be competitive across the entire value chain – would have to improve, amongst other things, its design capability; the technology used; its productivity; and how it markets SA-produced goods. To protect what it described as “strategic industries” against the flow of illicit goods, it has put in place several interventions. It has, for example, developed a price-referencing system which has been built into the risk-engine of customs to ensure that imports and exports that present high risk, or goods that are priced out of the norm, are stopped for inspections. It is also improving its ability to identify high-risk transactions more accurately and intends to impose the most punitive measures possible in respect of its penalty regime on offenders. Under its control of importer registrations, it will withdraw registrations for offenders – while at the same time also withdrawing licensing for warehouses and clearing agents where they are found to have conspired with offenders. Backing this up, the new Tax Administration Act has introduced additional investigative powers. Also, a new set of Customs Bills is currently before Parliament which will seek to strengthen the legal means available to Sars to execute its mandate. Looking at the elements directed at the industry, Brink felt that the design capability was achievable. “First it has to be noted that there are the two types of designers – one for textiles and the other for clothing. But there is a pool of both types of designers in this country. “Certain types of training and skills certainly have to be developed, but there are good design schools producing skilled and talented designers in both categories.” On the development of technology, Brink also felt that this was attainable – particularly with the incentive schemes now in place. Stateof- the-art capital equipment is anything but cheap, but this was overcome by government’s moves to stimulate the textile and clothing sectors. “Production incentives,” he told FTW, “can only be spent on new equipment, technology and skills training, so cost is adequately covered by this scheme. The age of equipment has already been improved considerably, with more efficient equipment having been put in place.” Industry marketing, Brink added, is also up to par. Regarding the pricereferencing system and Sars improving its ability to identify high-risk transactions more accurately, he was convinced that these were extremely viable tools in combating the inflow of illicit imports. “Accurately targeting suspect entities will help Sars, and overcome its lack of personnel,” Brink said. “Also honourable, compliant traders will be excused stoppages of containers for examination, something that has been a problem for them in the past under the random checking system. “It makes sense, although no doubt a few law-abiding people will get caught in the net until the high-risk engine is operating smoothly.” INSERT & CAPTION Accurately targeting suspect entities will help Sars, and overcome its lack of personnel. – Brian Brink