The Road Freight Association (RFA) says it will lobby against government’s proposed carbon tax, set for implementation on January 1, 2015, especially as the local availability of clean fuels and biofuels, producing less carbon dioxide, remains “an issue”.

The formal introduction of cleaner fuels in South Africa is set to take place on July 1, 2017.

RFA technical and operations manager Gavin Kelly adds that the carbon tax burden will also fall on the road freight industry, which has low margins and “kept the wheels of the economy turning”.

He says that the new tax will reduce South Africa’s “competitiveness even further”, adding to the recent 58c/ℓ diesel hike, as well as the additional increase of 23c/ℓ in the fuel levy that was announced in the February national Budget.

The National Treasury said in the Budget document that its current plan was to initiate what it called the first carbon-tax phase between 2015 and 2020, starting with a tax at a rate of R120/t of carbon dioxide (CO2) equivalent, increasing by 10% a year during the first implementation period.
The National Treasury indicated that “some of the revenues generated through the carbon tax will be recycled to fund the energy efficiency savings tax incentive”. This incentive would reportedly help com- panies to reduce their energy intensity and the country’s level of CO2 emissions.
Kelly says, while the RFA supports efforts to reduce greenhouse gas emissions, the association “strongly believes” that South Africa cannot afford another tax.
“More so, although much research has been done, there are no viable alternatives available for our industry and we are yet to hear of approved carbon project offsets from the Treasury that can reduce the tax burden of operators.”
Kelly adds that it is also of “grave concern” that the carbon tax will not be ringfenced for use in projects to reduce fuel consumption and carbon emissions, or for green efficiency projects.

“For as long as this is the case, the carbon tax will be viewed as just another initiative to generate revenue.”

Already faced with numerous rising costs, the proposed carbon tax will have a serious impact on the cost of logistics, rendering road transport uneconomical, Kelly adds.

“Over 80% of freight is currently moved by road. Transport costs are already unaccept- ably high – 14.6% of the gross domestic product.”
Kelly says the South African road freight industry is one of the “highest-taxed industries in South Africa, with ever-increasing road user charges, cross-border taxes, toll fees, vehicle licensing fees, inspection fees and other legal requirements”.

He says the RFA is concerned about the ability of the smaller truck operators in particular to meet all current and future tax demands.
Kelly also notes, however, that the RFA welcomes the increased investment in infrastructure announced in last month’s Budget.

“Functional roads, harbours and ports are vital for South Africa’s competitiveness as a nation. The allocation to the Depart- ment of Transport of R42.3-billion for 2013/14 and R53.4-billion for 2015/16 is an important step towards developing much-needed infrastructure. Transport is a major enabler of economic and socio- economic activity.”
Kelly also notes that the RFA intends to closely monitor provincial govern- ments’ spending on the secondary road network, as RFA members often find the network between smaller towns in dire need of upgrades.