Locally manufactured vehicles will probably get cheaper relative to imported vehicles in terms of the budget proposal to align the tax treatment, for ad valorem customs and excise duty purposes, between imported and locally manufactured vehicles. Photo: Reuters.

PRETORIA – Locally manufactured vehicles will probably get cheaper relative to imported vehicles in terms of the budget proposal to align the tax treatment, for ad valorem customs and excise duty purposes, between imported and locally manufactured vehicles.

Cova Advisory & Associates director Duane Newman said this would be positive for the local automotive manufacturing industry.

“Whether the duty on imported vehicles goes up, it’s still a positive for local manufacturers,” he said.

However, the National Association of Automobile Manufacturers of South Africa (Naamsa) were more guarded on this budget proposal.

Andrew Kirby, the president of Naamsa and president and chief executive of Toyota South Africa Motors (TSAM), said the association had taken note of the National Treasury’s proposal, and this matter would get the attention of the industry and authorities. 

Kirby said the decision not to adjust income tax brackets for inflation would yield an additional estimated R12.8 billion in personal income tax and may have a modestly negative impact on consumers’ disposable income.

Kirby said the Budget did not contain any major tax shocks with excise duty increases on a variety of products and fuel taxes rising at a rate below inflation.

He said Naamsa had also noted the planned introduction of a general broad-based carbon tax from June 1, which was projected to yield an additional R1.8 bn over the balance of the fiscal year.

The Automobile Association (AA) was concerned about the inclusion of the new carbon tax on fuel. 

“Besides being an additional line of tax on the fuel price, the inclusion of a carbon tax is grossly unfair by the government given the fact that South Africans will now be paying an emissions tax on inferior-quality fuel despite not having access to higher quality fuels which are available in many other markets in the world,” it said.

The AA said although the proposed increases to the General Fuel and Road Accident Fund levies were lower than expected, they remained concerned that these levies were seen as the “go-to” taxes for easy increases by the government. “With the addition of the carbon tax on fuel, this ‘easy’ tax collection method is being further exploited,” it said.

The AA said consumers now paid R5.34 towards indirect taxes on every litre of petrol bought, and R5.19 on every litre of diesel. With the increases announced in the budget, these levies would increase by a combined 29c for petrol and 30c for diesel, which include a 9c addition to the carbon tax of petrol and 10c on diesel.

Newman said the carbon tax would have an inflationary impact in the whole supply chain. The industry needed to understand the impact of the carbon tax from a long pricing perspective.

He disagreed that the carbon tax on fuel appeared to be a duplication of the emissions tax on cars. 

“The big users of fuel are not cars but big trucks, which don’t pay the emissions tax,” he said.

Newman said it was disappointing that there was not any extension to the 12I tax incentive in the Income Tax Act, which was there to attract big investments. He said the energy incentive had been extended to 2022 and big energy users needed to be looking to maximise this incentive to offset any carbon tax liability.

BUSINESS REPORT