In the instalment of this column published on February 20, we embarked on a journey of uncovering the history of customs duty in South Africa, which started in 1678. The article covered the years 1678 to 1803.

In this article, the journey restarts in 1803, when the Cape colony came under the control of the Bavarian Republic (the Netherlands), which lasted until 1806. In 1803, the prevailing tariff dispensation was removed, and the colonists were granted the right to trade with the Bavarian Republic without restriction. A customs duty of only 3% was imposed on all traded goods. It is evident that, with each change in control of the Cape, the customs duty dispensation was amended to benefit the country in charge.

In 1806, the Cape became a British colony again, but without a representative government, and remained so until 1854. Trade was controlled from England until a representative government was institutionalised in 1854. As was the practice during the first British occupation, the policy of preferential duties for British trade and shipping, as well as prohibitive restrictions on foreign traders, was introduced. This dispensation remained in place until 1855, when it was abolished in favour of a Customs Tariff Act, which allowed for equal treatment of British and foreign trade.

During the 48 years of British occupation, numerous changes were made to the Customs Tariff Act, although one thing remained constant, namely the protection of British shipping and British trade with the Cape. In essence, four practices were prominent during the 48 years. Firstly, higher customs duties were imposed on foreign goods than on British goods imported into the Cape. Secondly, British shipping was given preferential treatment in the form of lower customs duties on goods brought into the Cape on British ships. Thirdly, goods exported from the Cape to Great Britain were subject to lower rates of customs duty than goods exported by foreign countries. Finally, the British East Indian Company was granted special privileges.

The year 1854 was a defining year in inter- national trade – Great Britain accepted free trade in favour of mercantilist tendencies, marking a change in its international trade policies. The mercantilist philosophy held that a country needed to develop and expand its exports and do everything in its power to restrict imports. The rationale was that this would result in big trade surpluses, which would, in turn, result in benefits for all the country’s citizens.

To switch from this philosophy to free trade, in 1854, the Imperial Legislation was passed, which served to abolish the differentiated customs duties in the British colonies. The year also saw a representative government being established in the Cape, although Great Britain retained control of the tariff policy of the Cape.

In 1855, a simple tariff was framed, which no longer provided for preferential rates of customs duty. The customs duties were of a fiscal nature, which implies that they were created to generate revenue, unlike the case in South Africa today, where they are used to protect manufacturers – in other words, customs duties are used as an instrument of South Africa’s industrial policy.

Two types of customs duties were imposed in 1855, namely specific and ad valorem duties, and are still in use today. Specific duties are levied on an imported product based on the product’s volume, weight or the unit being imported, while an ad valorem duty is a percentage duty, which is imposed on the value of the imported product.