Monday, September 20, 2021

Nonetheless SACU is still the buzzword … spoken or not

CAPETOWN, SOUTH AFRICA: While it is common and easy to pick these words, “South African Customs Union” or SACU, on each and every budget speech delivered by Botswana’s Finance Minister Kenneth Matambo, the same cannot be said about his South African counterpart’s budget speeches.

The repeated mention or lack thereof of “SACU” in a budget speech was repeated in this year speeches delivered by Matambo and his South African counterpart Parvin Gordhan in early February and Wednesday respectively.

In early February, Matambo mentioned that Customs and Excise revenues, specifically SACU revenues, have for a long time been Botswana’s second largest source of revenue after diamonds.

“But these have of late been fluctuating due to performance of imports within the SACU region. With mineral revenues declining and those from SACU being volatile, there is therefore an urgent need to diversify our revenue base towards more sustainable and reliable sources,” Matambo said.

On the other hand, while giving his budget proposal speech here on Wednesday, Gordhan cared less about SACU or its much talked about “revenue sharing formula” which is still under review.

SACU is a custom union amongst five member states, South Africa, Botswana, Namibia, Lesotho, and Swaziland who are also subscribers to the larger regional bloc – Southern African Development Community (SADC).

On Wednesday, the closest that Gordhan came to talk about SACU was when he mentioned the need to modernise customs administration and combating of cross border revenue leakages.

“Multinational companies will be required to file further information with SARS on cross border activities from the end of year. We will continue to work actively with the international tax community and within government to modernise customs administration, money laundering and harmful tax practices,” Gordhan said.

Still on Wednesday, Gordhan told South Africans of a pending decision by his government to increase the excise duties for alcohol and tobacco with a rate of between six and 10 percent.

Although it is not clear how the increase in tax rate will affect the pockets of both South African and Botswana consumers, the move is likely to also have an impact on the revenue distributed to SACU member states.

In Botswana, elbow benders continue to feel the pinch of an alcohol levy which was introduced by President Ian Khama some eight years. The levy currently sits at 50 percent and has been increased on an annual by basis by at least 5 percent except in 2016.

The levy continues to receive heavy criticism from both consumers as well as leading local brewer, Sechaba Holdings.

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