SouthAfrica was pushing hard for the “unfair” revenue-sharing agreement between the Southern African Customs Union (Sacu) members to be reworked‚ both in terms of the formula itself and the way in which the money was used once it had been distributed‚ says Finance Minister Nhlanhla Nene.
SA was the “the cash cow” in the arrangement and had encountered resistance when it raised issues‚ the minister said.
He said a proposal would be presented to this year’s as yet unscheduled annual meeting of the heads of state of SA‚ Botswana‚ Lesotho‚ Namibia and Swaziland for them to resolve the matter “once and for all”.
The issue has been on the agenda for several years and has been prioritised by Sacu heads of state as one of the organisation’s priority work streams.
The five Sacu countries share a common external tariff and share the proceeds of customs and excise duties in accordance with a separate revenue-sharing formula for each element.
In addition‚ a developmental subsidy is built into the excise duty formula so that SA can aid its poorer neighbours.
This results in significant revenue flows to the other four countries in the union.
Nene was questioned about the Sacu agreement by the ANC’s member of parliament’s standing committee on finance‚ Des van Rooyen‚ during a briefing by the National Treasury on its annual strategic and performance plan.
The issue was also raised by PricewaterhouseCoopers’ head of tax technical‚ Kyle Mandy‚ during public hearings on the budget earlier this month.
Mandy said SA was over-subsidising its neighbours to its own detriment‚ paying about R30-billion a year more than it should pay because of the way the Sacu formula worked.
In 2014-15‚ SA paid R51.7-billion to its Sacu neighbours and it is projected to pay out R51-billion again in 2015-16.
The amount is forecast to drop to R36.5-billion in 2016-17 as a result of falling trade and the lower collection of customs duties.
Nene acknowledged that the reworking of the agreement had been on the agenda for several years and that progress had been “very slow”.
“It is a matter which we want to conclude as soon as possible because there are other avenues that we are beginning to explore than the ‘unfair’ revenue sharing formula that we are subjected to at the moment.
“Work is being done but working with five countries that entirely rely on the revenue that comes out of this formula is a difficult task. We are the cash cow so when the cash cow raises issues we always get resistance‚” Nene said.
“It is an issue which has been elevated to the heads of state and we are beginning to make progress in that space.”
In an interview after the briefing‚ he said “very strong” discussions were being held with the other countries‚ though SA understood that some of these countries were entirely reliant on the income derived from the Sacu revenue sharing agreement.
SA had stipulated that it would not participate in a meeting of ministers until such time as the matter was on the table.
Nene stressed that the issue was also a diplomatic one as there were many other aspects to SA’s relations with its neighbours apart from trade.
He said good progress was being made in talks about the use of the funds distributed.
SA would like to see the cash used for developmental purposes‚ such as infrastructure investment and promotion of intra-regional trade‚ which would be of mutual benefit.
“We would want an amicable solution to the matter rather than a simple breakaway. Our trade relations with BLNS (Botswana‚ Lesotho‚ Namibia‚ Swaziland) are very important‚” he said.
Nene said SA was assisting some of the countries such as Swaziland and Botswana to boost their revenue-raising capacity. — BDLive
Fairer customs deal on cards for SA – Nene
SA was the “the cash cow” in the arrangement and had encountered resistance when it raised issues‚ the minister said.
He said a proposal would be presented to this year’s as yet unscheduled annual meeting of the heads of state of SA‚ Botswana‚ Lesotho‚ Namibia and Swaziland for them to resolve the matter “once and for all”.
The issue has been on the agenda for several years and has been prioritised by Sacu heads of state as one of the organisation’s priority work streams.
The five Sacu countries share a common external tariff and share the proceeds of customs and excise duties in accordance with a separate revenue-sharing formula for each element.
In addition‚ a developmental subsidy is built into the excise duty formula so that SA can aid its poorer neighbours.
This results in significant revenue flows to the other four countries in the union.
Nene was questioned about the Sacu agreement by the ANC’s member of parliament’s standing committee on finance‚ Des van Rooyen‚ during a briefing by the National Treasury on its annual strategic and performance plan.
The issue was also raised by PricewaterhouseCoopers’ head of tax technical‚ Kyle Mandy‚ during public hearings on the budget earlier this month.
Mandy said SA was over-subsidising its neighbours to its own detriment‚ paying about R30-billion a year more than it should pay because of the way the Sacu formula worked.
In 2014-15‚ SA paid R51.7-billion to its Sacu neighbours and it is projected to pay out R51-billion again in 2015-16.
The amount is forecast to drop to R36.5-billion in 2016-17 as a result of falling trade and the lower collection of customs duties.
Nene acknowledged that the reworking of the agreement had been on the agenda for several years and that progress had been “very slow”.
“It is a matter which we want to conclude as soon as possible because there are other avenues that we are beginning to explore than the ‘unfair’ revenue sharing formula that we are subjected to at the moment.
“Work is being done but working with five countries that entirely rely on the revenue that comes out of this formula is a difficult task. We are the cash cow so when the cash cow raises issues we always get resistance‚” Nene said.
“It is an issue which has been elevated to the heads of state and we are beginning to make progress in that space.”
In an interview after the briefing‚ he said “very strong” discussions were being held with the other countries‚ though SA understood that some of these countries were entirely reliant on the income derived from the Sacu revenue sharing agreement.
SA had stipulated that it would not participate in a meeting of ministers until such time as the matter was on the table.
Nene stressed that the issue was also a diplomatic one as there were many other aspects to SA’s relations with its neighbours apart from trade.
He said good progress was being made in talks about the use of the funds distributed.
SA would like to see the cash used for developmental purposes‚ such as infrastructure investment and promotion of intra-regional trade‚ which would be of mutual benefit.
“We would want an amicable solution to the matter rather than a simple breakaway. Our trade relations with BLNS (Botswana‚ Lesotho‚ Namibia‚ Swaziland) are very important‚” he said.
Nene said SA was assisting some of the countries such as Swaziland and Botswana to boost their revenue-raising capacity. — BDLive
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