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 value-added 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:’ stating ‘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 R52.6 billion, then a mere six months later it is revised down to R47.2 billion, a deviation 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.’