Jul 20, 2010
SA business should investigate carbon tax implicationsBack
Engineering|Africa|Environment|PROJECT|System|Webber Wentzel|Africa|South Africa|Corporate Law|Energy|Environmental|Scandinavia
© Reuse this
The National Treasury has previously confirmed with Engineering News Online that the discussion document on carbon taxes would be released for public comment by the end of July or the beginning of August.
Treasury head of communications Jabulani Sikhakhane explained that comments on the document would be captured, and where ever possible, the document would be refined to reflect comments received. It would then be submitted to Cabinet for endorsement.
He said that any changes, or announcements, would be made at the time of the Budget or the Medium Term Budget Policy Statement.
Carbon tax is described as an environmental tax on emissions of greenhouse gases, and it is a flat tax, as opposed to a progressive tax.
The three ways to levy a carbon tax were: to tax the final consumer; to tax dirty output; or to tax the producer of the emissions. The discussion document would outline the approach that the country intended to pursue.
Webber Wentzel partner Hennie Bester recommended that a unified approach among business was the best way to understand how viable the carbon tax was in achieving its policy aims.
"However, a unified approach will only be possible if business players educate themselves on the important issues arising from a carbon tax, what the international best practices around these are, and how it should fit in with an overall mitigation policy."
REVENUE-NEUTRAL TAX PREFERRED
Bester hoped that such a tax would be revenue neutral, but warned that businesses should plan for the alterative scenario as well.
Thus, if emissions were taxed, tax collection elsewhere would be eased, for example there could be rebates or incentives for low-carbon dioxide (CO2) emitting growth.
Also, it would focus more clearly on the policy consideration underlying the tax.
Bester said that the imminent introduction of the CO2 vehicle emissions tax was a case in point: the overall observation was that this tax was a new source of State revenue - because it was not accompanied by corresponding relief elsewhere.
"Insisting on revenue neutrality is a reliable method for keeping the State honest about the purported policies underlying these new taxes," Bester said.
In Scandinavia for example, the desire to reduce very high personal income tax created a favourable environment of the introduction of a carbon tax.
South Africa's fiscal policy has actively aimed at addressing "bracket creep" for personal income taxpayers, and a carbon tax could further boost such policy, although, added Webber Wentzel, all of that could change in the context of the current global financial crisis.
TAX BASE, AND RATE, IMPORTANT
Bester says that the impact of a carbon tax depended on its rate and its base - for example, whether it would be imposed on emitters of carbon, producers of carbon intensive energy, or on the users of such energy.
Extensive modelling in this regard, according to the Long term Mitigation Scenario (LTMS) planning project of the South African Cabinet, has shown that a carbon tax was a highly effective instrument in combination with other policy mechanisms such as a cap-and-trade mechanism, assistance programmes, exemptions and incentives.
High emitters would be expected to seek exemption or holiday periods from the carbon tax and the support for this from low emitters would be very significant.
Edited by: Mariaan Webb© Reuse this Comment Guidelines (150 word limit)
Other Policy and Enforcement News
Article contains comments
Article contains comments
Recent Research Reports
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
This Week's Magazine
Three-dimensional (3D) printers being sold in South Africa by electronics distributor Rectron currently print in two types of plastic, but have a clear upgrade path over the next five years to eventually print in wood, ceramics and metal-alloy materials, says Rectron...
The world’s two dominant commercial aircraft manufacturers, Airbus of Europe and Boeing of the US, both recently announced that they had made record aircraft deliveries in 2014. Boeing set a global record for the industry with 723 commercial aircraft delivered, while...
The Western Cape is shifting further into the renewable-energy space with the official opening of a factory specialising in solar inverters, a key component of solar photovoltaic (PV) plants. The investment in the manufacturing facility in Cape Town aims to boost the...
Business Leadership South Africa (BLSA) last month welcomed Cabinet’s establishment of a technical team war room to undertake various interventions to improve electricity supply security over the short- and medium-term, but added that the private sector also had a...
Despite a rapid rise in mobile connections and the economic and social benefits of such connectivity, more than half of the world ended 2014 unconnected. For this reason, industry commentators believe the biggest impact of mobile technology is still to come –...