Johannesburg - The Recycling and Economic Development Initiative of SA (Redisa), the only approved waste tyre plan in the country, believes government’s planned tax model for waste tyres through an environmental tyre levy will place the effectiveness of extended producer responsibility schemes at risk.
Once the environmental tyre levy is implemented through the Customs and Excise Act, the prescribed levy of R2.30 a kilogram excluding VAT will be paid to the SA Revenue Service (Sars) instead of directly to Redisa.
National Treasury last month announced the postponement of the implementation of the levy from this month to February 1 next year.
Stacey Davidson, a director at Redisa, said she was not aware of the role the tyre industry might have played in the changes planned for the levy but noted the industry became advocates for direct payment to Sars only after the industry’s plan was not approved by the Environmental Affairs Department.
Riaz Haffejee, chairperson of the SA Tyre Manufacturers Conference (SATMC), said last month the industry had consistently advocated for the direct payment of the levy to Sars in support of government’s efforts to achieve improved transparency, accountability, monitoring and evaluation in the use of the funds raised by the levy to give effect to the industry’s legally obligated extended producer responsibility.
Davidson stressed Redisa was subject to government control.
She confirmed the waste tyre management fees collected since Redisa’s inception amounted to R2.02bn, including VAT.
Management
Davidson said 80 percent of the total revenue had been applied to the establishment and development of the waste tyre recycling industry, including capital investments for new industry small, medium and micro enterprises (SMMEs); SMME subsidies and revenue; support services, such as training and marketing; and the development of upstream incentives through the establishment of a product testing institute that would give effect to an independent environmental rating system for tyres.
“Redisa has been successful at taking the waste tyre diversion rate from 4 percent to 63 percent in just short years and aims to reach the target of 100 percent by the end of 2017.
“The management of 247 826 tons of waste tyres since inception has allowed for more than 200 SMMEs to be established and the SMME support of over 3000 jobs,” she said.
Davidson said the waste tyre fee was required to establish and sustain the end-to-end waste tyre management industry and three years into the implementation of the Redisa plan, about 10 000 tons of tyres were being collected each month, pre-processed and delivered to the end producers.
She said the transport network was made up of more than 70 black-owned small transport businesses while storage and pre-processing was happening across 22 black-owned waste tyre depot businesses.
“Should the waste tyre fee stop for any period of time the entire network currently in place will fall apart. There is insufficient value in the waste tyre industry to sustain any part of the end-to-end chain and the market is not yet fully established, meaning supply exceeds demand.
“The impact of slowing down pre-processing and processing capability implied by stopping revenue flows to Redisa will exacerbate the gap between supply and demand. Without continued subsidisation and set-up, the depots would reach capacity within a matter of months and collection would need to grind to a halt.
“This would not only put an entire network of small black-owned transporters out of business but would also result in stockpiles of waste tyres,” she warned.
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