It's fee trade, not free trade

Have you ever wondered how much it costs the International Trade Administration Commission of South Africa (Itac) to process a ‘duly completed application’ for an import or export permit, a rebate or drawback permit or certificate, a production rebate certificate or equivalent certificate under the Automotive Production and Development Programme (APDP), an eligible production certificate or equivalent certificate under the APDP, or any other permit or certificate?

If that wasn’t enough to ponder, add the cost of Itac’s various functions: investigating and verifying tariff amendments, trade remedies, import and export activities, any other legislation, trade agreements, agreements with regulatory authorities or organs of State, and tasks assigned by the Minister of Trade, Industry and Competition.

Whether you are unaware, unconcerned or find it trivial, if you are involved with Itac now or in the future, you might be in for a surprise. Hidden deep within the pages of the Government Gazette of June 21 is a notice that could raise questions about what your tax contribution actually pays for. Even more concerning is the brief 14-day comment period, which, if you are reading this piece on its publication date, you have likely missed. But hey, spoiler alert: time is money if you empathise with the Itac cause. What cause, exactly?

Soon, what you might have rightly assumed your taxs pay for may no longer be sufficient. You will need to make an additional contribution towards “at least a portion of these costs”. As to the extent of the ‘portion’, that will be revealed in time. As to whether there would be an associated improvement in Itac’s service levels – particularly in terms of turnaround times, since it would now become a paid service – is, of course, quite another matter.

The six-page Government Gazette notice for public comment appeared under the unassuming headline of ‘Draft Administrative Fees Regulations’; once promulgated, it will be known as ‘Itac Administrative Fees Regulations’.

The purpose of the regulations is reportedly to allow for the recovery of administrative costs incurred by Itac when it issues permits or certificates or performs other functions. It is argued that, in carrying out its mandate, Itac incurs substantial costs, which have not been recovered until now. Apparently, the accumulated financial pressures require Itac to recoup at least a portion of these costs by levying fees. However, the exact amount of the ‘substantial costs’ and ‘portion’ are not specified.

Before the promulgation of the regulations, Itac indicated that it would publish, for public comment, guidelines detailing categories and levels of fees, as well as other administrative aspects of the levying of these fees. No service- level agreement? It is Itac’s stated intention to set fees at levels that are in line with the actual administrative costs it incurs in performing its functions. This raises the obvious question: What exactly are Itac’s ‘actual administrative costs’?

The salary bill is the big-ticket item in any business’s financial statement. You might want to supplement your reading here by perusing Itac’s annual reports, but do so at your own peril. If you are merely interested in the headlines, in 2003/04, Itac employed 135 staff at a cost of R10 063 919 (an average of R74 547.55 per person). In 2013/14, the staff complement dropped to 122, but the costs increased to R61 108 793 (an average of R500 891.75 per person). In 2022/23, the staff complement dropped further to 99, but the costs increased to R82 456 567 (an average of R832 894.62). Here is the kicker from the last annual report: “Itac’s organisational structure consists of 131 approved posts, with 99 filled posts and 32 vacant posts. In addition, there are 15 contract employees, 12 of whom are in core business and 3 in support services.” Why the latter?

From a regional perspective, considering that Itac administers its functions not only for South Africa but also for the Southern African Customs Union – comprising Botswana, eSwatini, Lesotho and Namibia (BeLN) – the question arises: Are companies from these BeLN countries expected to pay the South African government for services rendered?

Literary “fee trade, not free trade”.