Busa rejects border agency due to cost

BUSINESS Unity SA (Busa) has added its voice to those opposing a border authority and cautioned against such a move, citing the strain this would place on the fiscus when the country is faced with the prospect of having its sovereign credit rating downgraded.

Busa pointed to the socioeconomic impact assessment study conducted on the formation of such an entity, which showed that setting up a border management authority would cost R15bn-R24bn, while capacitating the South African National Defence Force would come at a projected R2.5bn price tag.

“The fiscal space for the establishment of the [authority] is simply not available. The [Department of Home Affairs] has provided no information on the funding.

“Busa believes funding should be clarified. The assessment recommended against proceedings because of the high risk and high costs associated with a wholesale transfer of functions.

“We are concerned there is a substantial difference in the cost estimate provided in the assessment and that which has been communicated by the [Department of Home Affairs],” the business federation said.

But the Department of Home Affairs, the lead department in the initiative, is forging ahead and has signed a memorandum of understanding with the Police Ministry and vowed all operational differences among affected departments would be resolved in a week.

A similar memorandum is also in the works for the South African Revenue Service (SARS).

The Treasury and the Police Ministry would be most affected by a border authority — and, to a lesser extent, the Department of Health and the Department of Agriculture, Forestry and Fisheries because they also have a presence at the country’s ports of entry.

A key sticking point for the Treasury is the implications for the country’s tax administration and collection.

SARS is mandated to oversee the flow of goods, while home affairs’ core function and responsibility is managing the flow of people. Any overlap carries the threat of fragmenting the country’s tax collection regime.

In addition, “different resources and solutions are required to regulate the movement of goods versus people”, Busa said.

Busa’s views are contained in an 11-page submission the business federation made last week to the portfolio committee on home affairs, which is facilitating the public participation process on the Border Management Authority Bill.

Cosatu, the Treasury, the Police Ministry, Transnet, the Durban Chamber of Commerce and Industry, Fruit SA and the Tourism Business Council have also made submissions on the bill and presented a range of recommendations, including changing its wording and seeking clarity on the labour issues that might arise in the event a border management agency does come into being.

Ismail Momoniat, deputy director-general: tax policy and financial sector regulation at the Treasury, said at a committee sitting last week that the Treasury was still engaging with the Department of Home Affairs on outstanding issues.

Home Affairs Minister Malusi Gigaba expressed optimism that the issues would be resolved.