Treasury presses with plan for recycled tyre tax

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Redisa is opposed to the Treasury's proposal to implement a tyre levy at R2.30/kg of tyre and says this would place its recycling initiative in jeopardy. It made its objections known in submissions to Parliament's standing committee on finance.

It collects about R550m annually in fees from tyre manufacturers and importers. It has argued that if it was to get its funding through a budgetary allocation from the Department of Environmental Affairs, it would not be able to make long-term budget plans.

Also, there would be a hiatus between the proposed implementation date of the levy on October 1 and the next budgetary allocation in March, Redisa said.

However, Sharlin Hemraj, the Treasury's specialist on environmental and carbon taxes, noted in a submission to the committee that Redisa's 2016 annual financial statements showed it had a reserve of R665m. This, together with the fees collected from March 1, would be more than sufficient to tide Redisa over the hiatus period. Funds for Redisa would be provided for in the Treasury's allocation to the Department of Environmental Affairs.

Hemraj said the Treasury disagreed with Redisa that the fees paid by industry were not a tax. They were mandatory and not voluntary and, therefore, akin to a tax. It was problematic, she said, that Redisa was responsible for the collection and disbursement of revenues, yet it remained outside the Public Finance Management Act, "with limited or very limited accountability to government".

The South African Tyre Manufacturers' Conference and the National Automobile Association of SA supported the Treasury proposal, which would ensure greater transparency and accountability, Hemraj said.

She questioned the relationship between Redisa and its management company, Kusaga Taka Consulting (KTC), which, she said, received about R100m a year to manage the operations of the recycling initiative. Despite requests, the Department of Environmental Affairs had not been given details of the contractual agreement with KTC and questioned the fact that Redisa directors were also shareholders of KTC, creating an "untenable" conflict of interest.

Richard Marcus, Redisa's legal representative, said these submissions were "factually incorrect". Redisa would submit independent audit reports to demonstrate that "it is a properly managed and properly governed organisation which takes its responsibilities to manage waste tyres very seriously".

Source: Business Day