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.
Here is how one Permanent Secretary encapsulates the clear tension between democracy and bureaucracy in Botswana: “President Mokgweetsi Masisi’s Government is behaving like a state surrounded with armed forces in order to capture it or force its surrender. The situation has turned so volatile, for tomorrow is not guaranteed for us top civil servants.
These are the painful results of a personalized civil service in our view as permanent secretaries”. Although his deduction of the situation may be summed as sour grapes because he is one of the ‘victims’ of the reshuffle, he is convinced this is a perfect description of the rationale behind frequent changes and transfers characterising the current civil service.
The result of it all, he said, is that “there is too much instability at managerial and strategic levels of the civil service leading to a noticeable directionless civil service.” He continued: “Changes and transfers are inevitable in the civil service, but to a permissible scale and frequency. Think of soccer team coach who changes and transfers his entire squad every month; you know the consequences?”
The Tsunami has hit hard at critical departments and Ministries leaving a strong wave of uncertainty, many demoralised and some jobless. In traditional approaches to public administration, democracy gives the goals; and bureaucracy delivers the technical efficiency required for implementation. But the recent moves in the civil service are indicative of conflicting imperatives – the notion of separation between politicians and administrators is becoming blurred by the day.
“Look at what happened to Prisons and BDF where second in command were overlooked for outsiders, and these are the people who had sacrificially served for donkey’s years hoping for a seat at the ladder’s end. The frequency of the changes, at times affecting the same Ministry or individual also demonstrates some level of ineptitude, clumsiness and lack of foresight from those in charge,” remarked the PS who added that their view is that the transfers are not related to anything but “settling scores, creating corruption opportunities and pushing out perceived dissident and former president, Ian Khama’s alleged loyalists and most of these transfers are said to be products of intelligence detection.”
Partly blaming Khama for the mess and his unwillingness to let go, the PS dismissed Masisi for falling to the trap and failing to outgrow the destructive tiff. “Khama is here to stay and the sooner Masisi comes to terms with the fact that he (Masisi) is the state President, the better. For a President to still be making these changes and transfers signals signs of a confused man who has not yet started rolling his roadmap, if at all it was ever there. I am saying this because any roadmap comes with key players and policies,” he concluded.
The Ministry of Health and Wellness seems to be the most hard-hit by the transfers, having experienced three Permanent Secretaries changes within a year and a half. Insiders say the changes have everything to do with the Ministry being the centre of COVID-19 tenders and economic opportunities. “The buck stops with the PS and no right-thinking PS can just allow glaring corruption under his watch as an accounting officer. Technocrats are generally law abiding, the pressure comes with politically appointed leaders racing against political terms to loot,” revealed a director in the Ministry preferring anonymity.
The latest transfer of Kabelo Ebineng she says was also motivated by his firm attitude against the President’s blue-eyed Task Team boys. “The Task Team wants to own the COVID-19 pandemic and government interventions and always cry foul when the Ministry reasserts itself as mandated by law,” said the director who added that Masisi who was always caught between the crossfire decided on sacrificing Ebineng to the joy of his team as they (Task Team) were in the habit of threatening to resign citing Ebineng as the problem.
Ebineng joins the Office of the President as a deputy Coordinator (government implementation and coordination office).The incoming PS is the soft-spoken Grace Muzila, known and described by her close associates as a conformist albeit knowledgeable.
One of the losers in the grand scheme is Thato Raphaka who many had seen as the next PSP because of his experience and calm demeanour following a declaration of interest in the Southern African Development Community (SADC) Secretary post by the current PSP, Elias Magosi.
But hardly ten months into his post, Raphaka has been transferred out to the National Strategy Office in what many see as a demotion of some sort. Other notable changes coming into OP are Pearl Ramokoka formerly with the Employment, Labour and Productivity Ministry coming in as a Permanent Secretary and Kgomotso Abi as director of Public Service Reforms.
One of the ousted senior officers in the Office of the President warned that there are no signs that the changes and transfers will stop anytime soon: “If you are observant you would have long noticed that the changes don’t only affect senior officers but government decisions as well. A decision is made today and the government backtracks on it within a week. Not only that, the President says this today, and his deputy denies it the following day in Parliament,” he warned.
Some observers have blamed the turmoil in the civil service partly to lack of accountable presidential advisers or kitchen cabinet properly schooled on matters of statecraft. They point out that politicians or those peripheral to them should refrain from hampering the technical and organizational activities of public managers – or else the party (reshuffling) won’t stop.
In the view expressed by some Permanent Secretaries, Elias Magosi, has not really been himself since joining the civil service; and has cut a picture of indifference in most critical engagements; the most notable been a permanent secretaries platform which he chairs. As things stand there is need to reconcile the imperatives of democracy and democracy in Botswana. Peace will rein only when public value should stand astride the fault that runs between politicians and public managers.
Former Permanent Secretary to the President, Carter Morupisi, is fighting for survival in a matter in which the State has charged him and his wife, Pinnie Morupisi, with corruption and money laundering.
Morupisi has joined a list of prominent figures that served in the previous administration and who have been accused of corruption during their tenure in office. While others have been emerging victorious, Morupisi is yet to find that luck. The High Court recently dismissed his no case to answer application.
United States President, Joe Biden, is faced with a decision to make relating to the Covid-19 vaccine intellectual property after 175 former world leaders and Nobel laurates joined the campaign urging the US to take “urgent action” to suspend intellectual property rights for Covid-19 vaccines to help boost global inoculation rates.
According to the world leaders, doing so would allow developing countries to make their own copies of the vaccines that have been developed by pharmaceutical companies without fear of being sued for intellectual property infringements.
“A WTO waiver is a vital and necessary step to bringing an end to this pandemic. It must be combined with ensuring vaccine know-how and technology is shared openly,” the signatories, comprising more than 100 Nobel prize-winners and over 70 former world leaders, wrote in a letter to US President Joe Biden, according to Financial Times.
A measure to allow countries to temporarily override patent rights for Covid related medical products was proposed at the World Trade Organization by India and South Africa in October, and has since been backed by nearly 60 countries.
Former leaders who signed the letter included Gordon Brown, former UK Prime Minister; François Hollande, former French President; Mikhail Gorbachev, former President of the USSR; and Yves Leterme, former Belgian Prime Minister.
In their official communication, South Africa and India said: “As new diagnostics, therapeutics and vaccines for Covid-19 are developed, there are significant concerns [about] how these will be made available promptly, in sufficient quantities and at affordable prices to meet global demand.”
While developed countries have been able to secure enough vaccine to inoculate their citizens, developing countries such as Botswana are struggling to source enough to swiftly vaccine their citizens, something which world leaders believe it would work against global recovery therefore proving counter-productive.
Since the availability of vaccines, Botswana has been able to secure only 60 000 doses of vaccines, 30 000 as donation as from the Indian government, while the other 30 000 was sourced through COVAX facility. Canada, has pre-ordered vaccines in surplus and it will be able to vaccinate each of its citizens six times over. In the UK and US, it is four vaccines per person; and two each in the EU and Australia.
For vaccines produced in Europe, developing countries are forced to pay double what European countries are paying, making it more expensive for already financially struggling economies. European countries however justify the price of vaccines and that they deserve to buy them cheap since they contributed in their development.
It is evident that vaccines cannot be made available immediately to all countries worldwide with wealthy economies being the only success story in that regard, something that has been referred to as a “catastrophic moral failure”, head of the World Health Organisation (WHO), Tedros Adhanom Ghebreyesus.
The challenge facing developing countries is not only the price, but also the capacity of vaccine manufactures to be able to do so to meet global demand within a short time. The proposal for a patent waiver by India and South Africa has been rejected by developed countries, known for hosting the world leading pharmaceutical companies such US, European Union, the United Kingdom, and Switzerland.
According to the Financial Times, US business groups including pharmaceutical industry representatives, have urged Biden to resist supporting a waiver to IP rules at the WTO, arguing that the proposal led by India and South Africa was too “vague” and “broad”.
The individuals who signed the letter, including Nobel laureates in economics as well as from across the arts and sciences, warned that inequitable vaccine access would impact the global economy and prevent it from recovering.
“The world saw unprecedented development of safe and effective vaccines, in major part thanks to US public investment,” the group wrote. “We all welcome that vaccination rollout in the US and many wealthier countries is bringing hope to their citizens.”
“Yet for the majority of the world that same hope is yet to be seen. New waves of suffering are now rising across the globe. Our global economy cannot rebuild if it remains vulnerable to this virus.” The group warned that fully enforcing IP was “self-defeating for the US” as it hindered global vaccination efforts. “Given artificial global supply shortages, the US economy already risks losing $1.3tn in gross domestic product this year.”