Withdrawal of textile rebates moves closer

Alan Peat THE WITHDRAWAL of textile rebate provisions - first recommended in 1995, and which have stuttered along since without any final conclusion - now looks closer to completion. According to Brian Brink, head of the SA Textile Federation, the rebates - which effectively allowed some companies to import certain fabrics at a lower price than those produced locally - “created some distortion” in the SA textile market. The withdrawal first came up as long ago as the 1992-94 period, when a textile and clothing industry panel had recommended it to comply with conditions stipulated in the Uruguay round of talks of what is now the World Trade Organisation (WTO) - but was then the general agreement on tariffs and trade (GATT). As a result of this, it was also part of a report by the Board on Tariffs and Trade (BoT&T) in 1995, soon after the new government took power in SA. That report recommended that the rebate provisions listed should be phased out over the period September 1999 to 2002. “These provisions should have been withdrawn, but the recommendation was not implemented,” said Riaan de Lange, assistant director of Deloitte & Touche indirect tax division. However, in its 2002 report, the board recommended that 199 of the relevant rebate provisions be withdrawn, to be implemented by the SA Revenue Service (SARS) in due course. “It also recommended that the withdrawal of 86 of the provisions should be suspended pending further analysis of the availability of the fabrics concerned, the current and potential future supply and the effect of the withdrawal of the provisions,” said De Lange. The BoT&T, however, has just published a notice for this investigation. “This will also include rebate provisions that have not been listed in the 1995 report.” The main reason for investigating the withdrawal of the provisions relates a number of factors, he added. “These include the Textile and Clothing Task Group agreement; the decline in the need for such provisions; encouragement for investment and increased production in the industry; and the simplification of the tariff regime.”