The Automobile Association (AA) says it expects that already embattled consumers will balk at paying higher prices for tyres and will, unfortunately, continue using tyres that are in a poor condition because they cannot afford the new prices.
Earlier this month government announced the addition of a 38.33% excise duty to tyres imported from China. This is on top of existing excise duties of between 25% and 30%. Tyres sold locally will now have an excise loading of between 63.33% and 68.33%.
The increase in excise duties comes after the South African Tyre Manufacturers Conference (SATMC) argued to the International Trade Administration Commission (ITAC) that tyres were being imported to South Africa at “unfairly low prices”. This, SATMC says, is damaging the local tyre manufacturing industry.
However, the Tyre Importers Association of South Africa (TIASA) says even local manufacturers import up to 80% of the variety of tyre models they sell anyway and has questioned the rationale behind the increased taxation.
The AA says while the wrangling over the reasons for the increased excise duties continues, already financially-stretched consumers will, ultimately, bear the brunt of the decision.
“Increased fuel prices have seen food prices climb and resulted in higher private and public transport costs. Those with private transport will now have to pay more for tyres – essential safety equipment on vehicles – something we don’t believe will happen. Public transport providers such as busses and taxis will either not pay the new prices or merely pass the increases to their passengers. Both options are unacceptable,” says the AA.
According to official statistics from the Road Traffic Management Corporation (RTMC), 12541 people died on the country’s roads in 2021. Human error, environmental conditions (e.g., poor visibility, sharp bends, wet/slippery surfaces, and stray/wild animals), and vehicle factors such as bursting or smooth tyres, poor brakes, and faulty headlights contributed to these deaths. Bursting and smooth tyres contributed to 49% of deaths in this category, by far the biggest element in terms of vehicle factors causing road deaths.
“Tyres are critical pieces of safety equipment, and we always advise motorists to have them checked regularly and replaced if needed. Of course, we also advise motorists to budget for this expense as part of their overall vehicle ownership. But the reality is that the new prices will significantly increase the replacement cost of tyres, forcing many motorists to drive on tyres they should not. The incidents of bursting tyres, we believe, will increase sharply because of this,” notes the AA.
The Association says public transport users are also at risk.
“Operators not wanting to spend the extra money on new tyres will continue to drive with poor condition tyres, or use inferior ‘refurbished’ tyres, putting the lives of their passengers and other road users at risk. The increased prices of tyres are, simply put, going to create major road safety problems in future,” notes the AA.
The Association says it supports calls from organisations such as TIASA that the decision to add the extra excise duties be reversed.
“Government’s approach should be geared towards creating jobs and a sustainable economy, supported by tougher measures to curb corruption and to ensure the proper allocation of funds. In our view the issues around tyre pricing are systemic of deeper issues within the management of the country’s economy and consumers are now, again, being asked to carry the burden. Government should immediately reverse the introduction of the additional excise duties, and find a better, more long-lasting solution to the problem in the tyre sector that doesn’t impact negatively on consumers,” the AA concludes.
Also Read
Creating a disruption-proof supply chain in Africa
5 proven shipping container business ideas