Another day, another tax

Tiger Wheels & Tyre (TWT) has launched a scathing attack on a
waste tyre recycling initiative gazetted last week, claiming that
the government was trying to package it as a tyre
manufacturer and importer levy when the costs would
immediately be passed on to consumers.
Alex Taplin, the group managing director of TWT, said on
Tuesday there was a business case and ethical responsibility
to deal with scrap tyre but stressed the need to make it about
the environment and the importance of doing it properly.
Taplin’s comments relate to the Recycling and Economic
Development Initiative South Africa (Redisa), which has been
mired in controversy and was re-gazetted on April 17 for
public comment for 30 days after being approved by Water
and Environmental Affairs Minister Edna Molewa.
The Redisa plan, which was previously marketed as a
government initiative, was unveiled by Molewa in January but
withdrawn shortly afterwards when the SA Tyre Recycling
Process Company (SATRP) lodged an application in the South
Gauteng High Court to interdict Molewa and Redisa from
implementing the plan.
This was because of the failure to comply with the
department’s own regulations and to order Molewa to provide the SATRP with a timeframe for the
resubmission of its plan.
The SATRP, which represents 70 entities it claims comprise about 85 percent of the formal tyre and
motor vehicle industry in South Africa, has over the past 12 years spent R9 million to develop its own
waste tyre plan.
It withdrew its court application after it was given until April 30 to re-submit the plan.
The SATRP was informed in May that the department was happy with its plan and the required
modifications, but subsequently notified by the department on November 15 that its plan was
The department notified Redisa on the same day that its plan had been approved.
Etienne Human, the chief executive of the SATRP, said earlier this year that it was obvious “that
there is foul play at work”.
Jeff Osborne, the Retail Motor Industry Organisation’s chief executive, claimed at the same time
that its waste tyre plan was hijacked by Hermann Erdmann, the then national chairman of the Tyre
Dealers’ and Fitment Association (TDAFA) and now the chief executive of Redisa.
Osborne said the TDAFA’s plan was submitted to the department but then withdrawn and changed
and renamed Redisa by Erdmann, with ownership also reverting to Erdmann, who would also profit
commercially from it.
This was done by Erdmann without the mandate and involvement of TDAFA members and had cost
the TDAFA R600 000, he said.
Erdmann denied that he had hijacked the TDAFA’s plan but admitted that he had undertaken to repay
the TDAFA for money spent on the plan.
Taplin said Redisa’s proposed levy of R2.30 a kilogram on all new manufactured and imported tyres
equated to about R414m a year and the price of tyre’s would immediately increase by between 3
percent and 7 percent.
A fairly common vehicle like a Toyota Hilux 4×4 was equipped with tyre weighing about 18kg, which
meant a new set of tyres would cost an additional R165.50.
However, Taplin said the Redisa plan proposed to begin collection – not disposal – of tyres only in
10 months, which meant consumers would be paying a levy for the recycling of their tyres before it
happened and believed the Consumer Protection Act had a clear stance on this.
Taplin added it was envisaged that recycling activities from so-called “home grown industries” in
terms of the Redisa plan would only commence in about four years.
By that stage, it could be assumed almost R3 billion would have been paid by consumers in levies,
he said.
Taplin added that a factory recycling tyres into crumbed rubber cost about R40m and could recycle
about 4 000 tyres a day in an eight-hour shift employing 60 people at a factory, including finance and
administrative staff.
This suggested that only 10 factories would be required for 10 million tyres a year plus possibly
another two or three factories to start chipping away at the scrap tyre stockpile, involving total
capital expenditure of R400m.
But Taplin questioned where was the market that was going to consume this, why was it necessary
to collect R3bn in the next four years and what was the government planning to do with the extra
levies “that will certainly exist from now until eternity”.
Taplin claimed Redisa had “had very close and dubious links to government”, doubted Redisa’s plan
was genuine and that its plan did not have the support of manufacturers, importers or retailers.
He also cast doubt on Redisa’s claims that its plan would create 15 000 jobs, stating that the waste
tyre plans of both SATRP and TDAFA anticipated creating 800 jobs, which was more realistic.


(date:) 2012-04-29

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