Is Customs a facilitator of trade or a collector of revenue?

Jan 18, 2008
Author: Hester Hopkins and Quintus van der Merwe 

Importers face additional charges on their imported goods in terms of the recent Draft Revenue Laws Amendment Bill, 2007. Hester Hopkins and Quintus van der Merwe of Customs @ Wylie, an initiative of Shepstone & Wylie’s International Trade Department raise the question: Has South Africa’s Customs administration’s main role become that of revenue generation and collection?

Customs and Excise Authorities worldwide belong to the intergovernmental World Customs Organisation (WCO), which is particularly known for its work in areas such as the trade supply chain security, the facilitation of international trade and anti-counterfeiting and piracy initiatives, to name a few. These initiatives are in line with the main functions of Customs organisations internationally.

However in some parts of the world, including South Africa, it appears as if Customs administration's main role is that of revenue generation and collection.

Hopkins and van der Merwe say this view is substantiated by an assessment of the recent Draft Revenue Laws Amendment Bill, 2007, which proposes that the definition of Customs duty be changed.

Currently the Customs and Excise Act incorrectly classifies excise duties on imported goods as customs duties. Traditionally, excise duty has been applied to locally manufactured goods and customs duties to imported goods.

For practical reasons the law was interpreted such that if a commodity paid customs duty it would not pay excise duty, and hence the current definition is restrictive in the sense that the one or the other was payable on "excisable" goods.

The Draft Amendment Bill proposes that excise duties on imports should be separated from customs duties on imports. By inference this means that an imported commodity could pay excise and customs duties at the same time.

As part of the Explanatory Notes to the Draft Revenue Laws Amendment Bill, 2007 it controversially points out that the inclusion of excise duties within the customs duty definition has "unintended consequences both in terms of revenue estimation and international comparison of tax revenues".

In layman's terms this translates into: a new source of revenue has been found by the simple change in wording that allows excise duties to be raised on imported goods.

Hopkins and van der Merwe believe this issue needs further debate. To participate in the debate send your views to customs@wylie.co.za or 0860CUSTOMS.