Botswana’s import car industry market future looks bleak following the recent unearthing of massive tax evasion by the dealerships at the behest of Botswana Unified Revue Services (BURS).
WeekendPost has established that given the tax the car dealers have been evading for years running in millions, dealers will likely not be able to pay the dues to the government coffers anytime soon. It is understood that the move may see many of them closing down for good following the flouting of the customs duty law. One of the fong kong car dealers, Brian Tom of Tom’s Import cars, told WeekendPost this week that: “Let us forget about the import cars. The BURS guys have closed in on us, and it looks permanent (closure).”
He added that the, “tax collectors are even refusing with those cars they have possessed. They valued these cars and after we pay for the valuation they refused to give the cars back on reasons that they are investigating us. And these cars are our money. We bought them with our cash with expectation that they will be bought to accumulate back the money.” This publication understands that as the tax man cracks the whip, 1522 vehicles have been confiscated so far from 24 car dealerships in Mogoditshane.
“We have written extensive statements and affidavits at Police on how we have been buying these imported cars from Durban in South Africa. It seems like they want to further incarcerate us for doing such business,” he pointed out. The Import car dealer highlighted that it will be difficult to sell these imports going forward while adding that: “it’s either they want to stop us from doing this business or they want to do it themselves.” The car dealer emphasised that there are no jobs in the country but they are just shutting down the industry which has employed many Batswana.
“As I speak, all garages in Mogoditshane have been closed up. All offices selling cars have also been closed. Even my office is closed. It’s been closed since January up to now. As the month comes to an end I don’t know what to do for survival,” he said adding that he has even given up. “I am contemplating on removing all the branding in the office and look for a different business or go back to the village. I am giving up,” he highlighted.
Tom also took time to further tell this publication that he regrets casting his vote in favour of the ruling Botswana Democratic Party (BDP) as he did not listen to someone who persuaded him to remove the party from power. “If President Dr Mokgweetsi Masisi knows about all these things then he is not fit for office. You cannot attack an existing car industry. This industry has even employed people. People make a living through selling these cars,” he lambasted.
Meanwhile, a customer of the imported cars, Thabang Letsibogo also threw in his penny about the matter from a local customer perspective. He cited the business mogul Satar Dada who might have politically influenced the tax man to go for the dealers who sell at a cheaper price than big dealers.
“I think Satar Dada fears competition. He controls the economy of this country and enjoys monopoly. Like the infamous Guptas in South Africa, this is done just to favour him. But cars at Motor Centre and Barloworld are very expensive,” the fong kong customer stressed out. He continued to highlight that the economy of Mogoditshane is now collapsing due to the prevailing circumstances. Mogoditshane will be a ghost village soon with all car garages closed, he said.
Another customer who spoke on condition of anonymity pointed a finger at the import car dealership. He warned that “they have to do business the proper way. But it is not over. They can pay the fines, then withdraw from doing shady deals.” When a car was bought at P40 000 from Durban they must not down price it to P20 000 to dodge tax at the border, that money should have gone into the country to provide key developments.
He observed that “the only "danger" that they are facing in future, if the dealers manage to open up, as Mogoditshane cars consumers – is inflated prices. Just as example, he said, a Honda fit which now costs around P20 000 will probably then be escalated to cost approximately P45 000. When reached for comment, Motor Centre Toyota Botswana proprietor Dada dismissed the assertion that he fears competition: “We don’t sell those cheap cars. It’s totally different. Different markets.”
On his alleged political interference to curb competition from such dealers he told WeekendPost that there is: “no political interference. Nothing like that,” while attacking the fong kong import dealers to pay tax: “why do it in the first place? The problem is with these guys because they are not paying the duty. They are at fault with the law. It’s that simple. No problem in seeing that.”
Independent Lawyer view of the BURS v Car Dealers saga
A Gaborone based attorney, Karabo Nkitseng of Ndina Law Firm highlighted to Weekend Post that BURS is right to fight against Tax leakages, but only to an extent that they satisfy themselves that indeed there is tax leakage. He pointed out that the biggest worry is founded on an assumption that the actual tax payer is the customer, the question then should never be about affordability. “There should be no outcry from car dealers’ because they only paying tax over the actual cost and will recover that on the purchase price as the pass on cost to consumers,” attorney Nkitseng stated.
He explained: “I want to believe that these guys are simply saying we buy cars at 500 US dollars even though they know they bought at 2000 US dollars, so the 500 US dollars is simply for computation of customs duty, but when they get to the customer they price on the 2000 US dollars. You can imagine big players at Mogoditshane car dealers doing that with over 1000 cars?’’ he wondered.
“Which means their savings is on the leakage. That is what is happening on the ground. And how much those guys are pocketing. How much is the government losing. So to curb this it should be a joint effort between Competition and Consumer Authority with BURS. That way all stakeholders are being protected.” According to the Senior Counsel, with small individuals doing the business, for example they buy a car for BWP 50 000, then the dealer at Durban gives them a receipt of 30 000 so that 'customer' or owner of the car can pay less tax on it.
“The emphasis of paying tax should be directed mostly to big import car companies as they are seriously evading tax charges,” he highlighted.The reason right now, he explained, why one can negotiate a high price reduction at Mogoditshane is not even competition based, it’s simply the one going below just eating up on his profit margin because of the tax leakage.
He further observed that if one gets an individual buying vehicles and declaring the actual cost then customs duty is properly charged and he goes to Mogoditshane to sell, his price build up is then inclusive of customs duty price component, he is then forced to VAT register in order to recoup the tax component, he then will sell the vehicles to consumers who will be buying with a proper cost reflective price.
“Once the prices are excessive Competition and Consumer Authority would know from the declaration that was made at the time of payment of customs duty. We as customers then just buy thinking we got a better deal,” he said. According to the lawyer, the only fear car dealers are facing is that they are going to lose business. Meanwhile BURS Acting Commissioner General (CG) Segolo Lekau recently confirmed to Weekend Post that a number of businesses especially those importing goods are trespassing the customs law.
“It appears the citizens are working hand in hand with these businessmen and agree to be given falsified payment documents that do not necessarily depict the real price. At the end government is losing a lot of money because we claim less than we should be from SACU,” said the Acting CG. Lekau continued; “this now may force the government to increase tax because she may feel that what she is getting is very low as she will not be getting the actual custom duty and VAT corresponding with the product imported.”
Following the seizure of cars in Mogoditshane, Lekau told this publication that they may now start setting prices for ‘Fong-Kong’ cars. This comes after this publication recently reported that BURS is swimming in a pool of more than P3.3 billion debt emanating from uncollected tax arrears. According to BURS annual report 2018, BURS is failing to manage its debt by effectively and efficiently collecting the arrears to make sure the funds reach the government coffers for development of the country.
While there is no hard-and-fast rule in politics, former Molepolole North Member of Parliament, Mohamed Khan says populism acts in the body politic have forced him to quit active partisan politics. He brands this ancient ascription of politics as fake and says it lowers the moral compass of the society.
Khan who finally tasted political victory in the 2014 elections after numerous failed attempts, has decided to leave the ‘dirty game’, and on his way out he characteristically lashed at the current political leaders; including his own party president, Advocate Duma Boko. “I arrived at this decision because I have noticed that there are no genuine politics and politicians. The current leaders, Boko and President Dr Mokgweetsi Masisi are fake politicians who are just practicing populist politics to feed their egos,” he said.
Former Botswana Democratic Party (BDP) parliamentary hopeful, Lawrence Ookeditse has rejected the idea of taking up a crucial role in the Botswana Patriotic Front (BPF) Central Committee following his arrival in the party this week. According to sources close to development, BPF power brokers are coaxing Ookeditse to take up the secretary general position, left vacant by death of Roseline Panzirah-Matshome in November 2020.
Ookeditse’s arrival at BPF is projected to cause conflicts, as some believe they are being overlooked, in favour of a new arrival. The former ruling party strategist has however ruled out the possibility of serving in the party central committee as secretary general, and committed that he will turn down the overture if availed to him by party leadership.
Ookeditse, nevertheless, has indicated that if offered another opportunity to serve in a different capacity, he will gladly accept. “I still need to learn the party, how it functions and all its structures; I must be guided, but given any responsibility I will serve the party as long as it is not the SG position.”
“I joined the BPF with a clear conscious, to further advance my voice and the interests of the constituents of Nata/Gweta which I believe the BDP is no longer capable to execute.” Ookeditse speaks of abject poverty in his constituency and prevalent unemployment among the youth, issues he hopes his new home will prioritise.
He dismissed further allegations that he resigned from the BDP because he was not rewarded for his efforts towards the 2019 general elections. After losing in the BDP primaries in 2018, Ookeditse said, he was offered a job in government but declined to take the post due to his political ambitions. Ookeditse stated that he rejected the offer because, working for government clashed with his political journey.
He insists there are many activists who are more deserving than him; he could have chosen to take up the opportunity that was before him but his conscious for the entire populace’s wellbeing held him back. Ookeditse said there many people in the party who also contributed towards party success, asserting that he only left the BDP because he was concerned about the greater good of the majority not individualism purposes.
According to observers, Ookeditse has been enticed by the prospects of contesting Nata/Gweta constituency in the 2024 general election, following the party’s impressive performance in the last general elections. Nata/Gweta which is a traditional BDP stronghold saw its numbers shrinking to a margin of 1568. BDP represented by Polson Majaga garnered 4754, while BPF which had fielded Joe Linga received 3186 with UDC coming a distant with 1442 votes.
There are reports that Linga will pave way for Ookeditse to contest the constituency in 2024 and the latter is upbeat about the prospects of being elected to parliament. Despite Ookeditse dismissing reports that he is eying the secretary general position, insiders argue that the position will be availed to him nevertheless.
Alternative favourite for the position is Vuyo Notha who is the party Deputy Secretary General. Notha has since assumed duties of the secretariat office on the interim basis. BPF politburo is expected to meet on 25th of January 2020, where the vacancy will be filled.
Botswana Democratic Party (BDP) big wigs have decided to cancel a retreat with the party legislators this weekend owing to increasing numbers of Covid-19 cases. The meeting was billed for this weekend at a place that was to be confirmed, however a communique from the party this past Tuesday reversed the highly anticipated meeting.
“We received a communication this week that the meeting will not go as planned because of rapid spread of Covid-19,” one member of the party Central Committee confirmed to this publication. The gathering was to follow the first of its kind held late last year at party Treasurer Satar Dada’s place.