Hon Chairperson, hon Minister Gordhan, hon Deputy Minister Nene, hon Ministers, Deputy Ministers, Members of Parliament, distinguished guests and viewers at home, the South African government has taken crucial steps over the past four years to build up and implement a strong policy framework intended to address the country's developmental priorities.
According to Sars, the rapid growth in illicit trade such as counterfeit goods, undervalued textiles and clothing originating from the east, in particular, continually erode South Africa's revenue base and was the main cause of the closure of the clothing and textile factories and numerous job losses. As hon Thaba Mufamadi has said, the illicit economy is a major concern. Illegal imports and underinvoicing provide a grossly unfair advantage to manufacturers in other jurisdictions and must be stopped.
The Licensing of Businesses Bill speaks to the issue of illicit and illegal goods, because it is focused on stamping out South Africa's significant illicit economy. We have a significant illicit economy in this country which is damaging to the prospects of small businesses, as hon Van Rooyen has said. This is the economy of illegal imports and trade in substandard products. This is the economy of people who do not pay VAT and so on, and then compete unfairly with people who observe all these requirements.
A set of new Customs Bills is currently before Parliament and will seek to strengthen the legal means available to Sars to execute its mandate in today's environment. This process is taking into account identified needs to do with enforcement and investigations, and the imposition of punitive measures by way of a predetermined penalty regime.
The primary aims of the Bill are set out in section 3 as follows:
a) to provide systems and procedures for customs control of all goods and persons entering or leaving the Republic;
b) to enable the effective collection of ... tax on such goods ...
... imposed in terms of the tax levying Acts; and
c) to facilitate the implementation of ...
(ii) other legislation applicable to such goods or persons.
The Bill facilitates the implementation of other legislatures' prohibiting, restricting or regulating the import or export of certain goods, and for that reason direct powers are assigned to customs to detain and deal with goods categorised as prohibited, restricted or sectorally controlled goods. The Bill provides for the detention of suspected counterfeit goods and the procedures to be followed when such goods are detained.
Nedlac facilitated constructive negotiations resulting in the Customs Bills, including: harsher penalties for customs offenders; naming and shaming of customs offenders; suspending, revoking and withdrawing import licences of customs offenders; disposing of seized goods in a manner that does not undermine local production and additional customs capacity; and placing limitations on ports of entry.
The clothing, textile, leather and footwear sectors play an important role in the South African economy. These are strategic economic sectors that require significant attention, given their potential to create jobs and grow the domestic economy. Government has introduced incentive schemes - production incentives will be increasingly grant-based, thus reducing reliance on tax incentives - to boost manufacturing capacity and support job creation.
Sars will impose the most punitive measures possible in respect of its penalty regime on offenders, including, but not limited to, maximum penalties, forfeiture and seizure of goods found to be in contravention of the law.
A highlight of the industry is that it is a significant employer of women and of people in communities where few other employment opportunities exist. It is estimated that 94% of workers in the industry are black, that is African, Indian and Coloured, and many are located in decentralised rural areas. This means that any job losses or employment growth will have a disproportionate impact on black women and woman-headed households.
I would like to thank the committee chairperson, hon Thaba Mufamadi, and hon Van Rooyen for having the patience that they do have with the committee.
Now, hon Harris, let me respond to you. We need to compliment Sars for ensuring that they consulted three senior legal counsel for their opinions on this matter. That shows the capacity that Sars has in regard to the issue.
Prof G T S Eiselen said:
The term "inland port" ... is not an official customs term ... It is not any term or official status accorded to such facilities in the terms of the current customs legislation.
Hon Koornhof made mention of this, saying that perhaps the opposition should have consulted lawyers rather than consulting economists for them to get a greater understanding of the legislation. We thank you, hon Koornhof, for mentioning that.
Hon Harris did not even attend the public hearings. On the public hearing days he came and took the committee aback with proposals to amend the legislation. Then he realised that his proposals were not finding ... [Interjections.]