http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.25Change: 0.12
R/$ = 11.59Change: 0.05
Au 1197.40 $/ozChange: 2.94
Pt 1200.50 $/ozChange: 3.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Jul 20, 2010

SA business should investigate carbon tax implications

Back
Engineering|Africa|Environment|PROJECT|System|Webber Wentzel|Africa|South Africa|Corporate Law|Energy|Environmental|Scandinavia
Engineering|Africa|Environment|PROJECT|System||Africa||Energy|Environmental|
engineering|africa-company|environment|project|system|webber-wentzel|africa|south-africa|corporate-law|energy|environmental|scandinavia
© Reuse this



South African companies must investigate the implications of a carbon tax, the details of which will be released soon, corporate law firm Webber Wentzel has said.

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.

A revenue-neutral approach to new taxes simply meant that despite changes to the tax system, the State would not recover more, or less tax, from the taxpaying community - although the composition of that community may change.

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.

Bester added that such an approach to carbon tax would be more attractive, both from the tax policy side, and to the taxpaying community as a whole, since the State would be able to show that carbon tax was not simply a new source of revenue. The overall tax burden on the economy would not change, but would place such burden at different places.

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.

International experience also indicated that revenue neutrality was a best practice for the introduction of a carbon tax.

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.

Bester stated that the way in which such revenue was to be applied was a different issue altogether, but "it is worth noting that a country with South Africa's developmental needs will need to factor this into its broader carbon mitigation policy".

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.

"A carbon tax, irrespective of its base or rate, will not only have a direct impact on those subjected to the tax, but will also have a ripple effect throughout the economy. It thus seems obvious that a unified approach will carry more weight and have greater impact on the formulation of the broader emission policy of which a carbon tax should be one - very important - component".

However, it also seems obvious that high emitters will have greater direct exposure to a carbon tax, and their interests may thus differ from that of low or insignificant emitters.

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
SARUSHEN PILLAY Sasol has proven the viability of composting to remediate its industrial sludges over the course of two years of testing
Petrochemicals giant Sasol’s industrial sludge bioremediation project aims to move into full commercial scale over the next two years to treat 200 000 t/y of industrial sludge. The project uses aerobic composting to convert the sludge from its Bioworks water...
GREEN ENERGY Projects that use wind to generate renewable energy are essential
South Africa needs to pursue projects that use wind for renewable- energy generation, as this green source of energy mitigates the emission of greenhouse gases (GHGs) while restoring and improving the ecosystem, says carbon advisory firm Promethium Carbon director...
This year, 82 companies met the JSE’s Socially Responsible Index (SRI) requirements relating to environmental, social and governance (ESG) policies and management practices, compared with only 72 companies in 2013, as companies become more aware of how they...
More
 
 
Latest News
China appears to have been routinely underestimating output from its sprawling steel sector, with official figures for last year alone 40-million tonnes below a key industry estimate - an amount equivalent to Germany's entire annual production. Beijing has vowed to...
Lumwana, Zambia
Canada’s Barrick Gold Corp will suspend operations at its Lumwana copper mine, in Zambia’s Northwestern province, after the country enacted legislation that raised the royalty rate on openpit mining operations from 6% to 20%. TSX- and NYSE-listed Barrick, the world’s...
The Labour Court in Johannesburg has set aside the 2011-2014 metal sector wage agreement, the National Employers' Association of SA (Neasa) said on Thursday. The 2011-2014 wage deal was the result of an agreement between the Steel and Engineering Industries...
More
 
 
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
South Africa remains an important manufacturing and export platform for Ford Motor Company, says executive chairperson Bill Ford. However, he adds that other countries on the continent are “becoming interesting”, and that the US carmaker is casting its net wider for...
TO BE PHASED INTO SERVICE The first MeerKAT dish, with another 63 to come
Germany’s Max-Planck-Society (MPG) and the Max-Planck-Institute for Radio Astronomy (MPlfR) are investing €11-million (about R150-million) into South Africa’s MeerKAT radio telescope array programme. The money will be used to design, build and install S-band radio...
Infrastructure spend in sub-Saharan Africa will grow from $70-billion in 2013 to $180-billion by 2025, says PwC capital projects and infrastructure Africa leader Jonathan Cawood. This is one of the findings of PwC’s Capital Projects & Infrastructure report on East...
Private-owned defence and aerospace manufacturer Paramount Group and the Ichikowitz Family Foundation unveiled its Anti-Poaching Skills and K9 Training Academy in Magaliesburg last month.
MATT BARKER Wireless networks should enable users to engage and must provide relevant information to them based on their activity and location
The inclusion of Bluetooth to provide sub-three meter accuracy and heightened functionality for users is one of the ways to change existing wireless networks into engagement networks. An engagement network differs from common wireless networks in that it enables the...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks