REDISA has stated that it fears new tyre levy plans by the South African Government will damage the prospects of the tyre recycling operations in the country.
Currently, tyre manufacturers and importers pay REDISA a monthly fee of R2.30/kg of tyre which it uses to fund its recycling activities.
The Treasury plans to replace this fee from October 1 with an environmental levy of the same amount.
The provision is contained in the draft Rates and Monetary Amounts and Amendments of Revenue Laws Bill which is under deliberation by Parliament’s standing committee on finance. In terms of the proposals, the Department of Environmental Affairs would make an annual budget allocation to Redisa, which may be more or less than the existing levy paid to REDISA.
REDISA, said in a submission to the committee that this form of funding was uncertain and would require a shift in its planning and contractual arrangements from a five-year time horizon to one year.
“In order for REDISA to achieve its planned objectives it requires predictability in funding over the long term,” the organisation said during public hearings on the bill.
REDISA attorney Halton Cheadle told MPs that senior counsel had advised that the imposition of a levy would be unconstitutional because it was irrational.
Cheadle said the Treasury had failed to consult the waste industry before the 2015 decision to replace the fee with a levy was taken and the proposal would cut off Redisa’s funds mid-term without the Treasury providing it with alternative funding to meet its obligations for the remaining six months of the 2016-17 fiscal year.
“The cutting off of funds and a slowdown will mean that the entire network will fall apart.”
Cheadle proposed that the provision be withdrawn, failing which it should be deferred to 2017.
Treasury chief director of legal tax design Yanga Mputa said the Treasury was involved in discussions with the Department of Environmental Affairs on the issue.