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‘DUBAIS’ SAGA: FINANCE MINISTER SETTLES FOR 8 YEARS

14/10/2020 00:47:00 BY SIBONGILE SUKATI

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MBABANE – Finance Minister Neal Rijkenberg has rejected the 12-year age limit for import cars resolved by Members of Parliament (MPs).

Instead, the minister said as a balancing act, he would review the seven-year limit currently in force with a new age limit, which would be eight years.

The minister said the eight-year age limit was what obtained in most of the countries in the region like Namibia and Lesotho.

Rijkenberg mentioned this in his response to Motion No.17/2020, which he tabled in the House of Assembly on Monday.

The House had resolved that the minister should forthwith justify the rationale of capping the seven years period for importing used cars in terms of Legal Notice No.183 of 2020, in light of the strict provisions of Section 3 of The Import Control Order, 1976 and that the conduct of the minister must also take into account the public interest.

Minister

The minister was further directed to forthwith alternatively cap the period to 12 years.

In response, the minister said the move by the ministry to reduce the age limit for second-hand vehicles imported from outside the South African Customs Union (SACU) revenue share was for safety, environment and human health.

The minister further informed the MPs that it had also been observed that there was rampant under-declaration of these vehicles, which negatively impacted on overall revenue collection from this subsector.

“Eswatini’s revenue from SACU used to make at least 50 per cent of the national budget yet in 2020/21 SACU revenue is about 40 per cent of the national budget,” reads the report.

Rijkenberg said while this may not be viewed as being an outcome of Eswatini’s drive to intensify domestic revenue generation, other SACU member states revenue shares as proportion of the SACU Common Revenue Pool had been rising while Eswatini’s had been declining.

The minister said Eswatini’s proportionate share of the CRP had declined from 11 per cent in 2005/06 to seven per cent in 2020/21 and this was a result of the decline in intra-SACU imports for the country as over 70 per cent of the SACU revenue that flowed to the country was calculated through the intra-SACU imports.

Rijkenberg said there was, therefore, a need for some intervention at this point as Eswatini’s share of the CRP without any intervention looked gloomy.

“Also, most dealers in used imported vehicles deflate export or purchase price and further understate declarations for income tax,” said Rijkenberg.

The minister submitted that while most dealers in used motor vehicles were bankable, there were groups of dealers who avoided the banking system to avoid controls.

On the issue of public interest, Rijkenberg said that a reduction in the importation of second-hand motor vehicles from outside SACU, as a result of the reduction in the age limit, would most likely impact positively on Eswatini’s level of intra-SACU imports, which would lead to a higher SACU revenue share.

He said the resultant higher revenues from SACU, if efficiently allocated, had a potential to ignite more economic activity which may result in improved standard of living for emaSwati, which was in the public interest.

The minister further brought to the House’s attention the Import Permit Regulations of 1980, which state that every importer must apply for an import permit prior to importing goods that he intended to purchase from whatever country outside SACU.

He said according to the regulations, bringing goods into Eswatini without any import permit was an offence.

“It has been observed that a majority of the second-hand motor vehicle dealers do not apply for an import permit prior to importation or purchase,” stated the minister.

Importers

He said as a result, ever since the Legal Notice came into force, a number of importers had been approaching the ministry requesting to be granted permits for vehicles above seven years, with the justification that they had already purchased the vehicles from various suppliers in Japan and/or Singapore.

The minister said besides the breach of regulations, the ministry had set up a committee that would review the applications and each importer would be required to provide evidence that the vehicles were purchased on or before August 28, 2020.

He said a grace period for vehicles purchased up to tomorrow (October 15, 2020) would be given.

Rijkenberg said this would apply to both individual and commercial importers.

Furthermore, the minister said tax compliant commercial importers would be allowed to import up to 10 per cent of their annual import volumes which was meant to allow for a smooth transitioning for the subsector and this would last up to December 31, 2020.

On another note, on safety and environment, the minister said there was a positive correlation between the age of a vehicle and its impact on the environment, especially if the vehicle was not well-serviced and or heavily used.

He stated that emission of noxious gases increased in quantities when the engine was old and inefficient.

“The situation, if not controlled, will increase the country’s environmental burden, especially because the country does not have suitable waste treatment and emission testing facilities.”

The MPs had called upon the minister to inform the House why he had not implemented the House resolution, calling upon him to reverse the seven-year age limit to at least 12 years.

Revenue

The MPs in particular, Siphocosini MP Mduduzi Matsebula, had asked the minister how much revenue the country was collecting from the import vehicles, popularly known as ‘Dubais’. He had further asked the minister to make a comparison on how much would be made from SACU.

MP Matsebula had further asked if Cabinet and the minister had considered the whole value chain when making this decision, such as money collected from shipping and rental income among others.

“The value chain is too wide, are we willing to let go of all these elements in what we are doing?” the MP had asked.

Meanwhile, the initial mover of the motion, Siphofaneni MP Mduduzi Simelane, said a majority of emaSwati could not afford cars which only had an age limit of seven years.

He said this would cripple the poor emaSwati, who were using these vehicles to try and make a decent living.

Lobamba Lomdzala MP Marwick Khumalo said the minister should have consulted before implementing this decision.

He argued that the reason Eswatini was unpopular with SACU was that the money received from the union was used to pay civil servants’ salaries.

The minister’s responses are yet to be debated by the House.