The Road Freight Association (RFA) said on Wednesday that it would 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, remained “an issue”.

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

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

He added that the new tax would reduce South Africa’s “competitiveness even further”, adding to the recent 58c/litre diesel hike, as well as the additional increase of 23c/litre 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 would be recycled to fund the energy efficiency savings tax incentive”. This incentive would reportedly help companies to reduce their energy intensity and the country’s level of CO₂ emissions.

Kelly said while the RFA supported efforts to reduce greenhouse gas emissions, the association “strongly believed” that South Africa could not 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 Treasury that can reduce the tax burden of operators.”
 
Kelly added that it was also of “grave concern” that the carbon tax would not be ring-fenced 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 would have a serious impact on the cost of logistics, rendering road transport uneconomical, Kelly added.

“Over 80% of freight is currently moved by road. Transport costs are already unacceptably high – 14.6% of the gross domestic product.”
 
Kelly said the South African road freight industry was 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 said the RFA was concerned about the ability of the smaller truck operators in particular to meet all current and future tax demands.
 
Kelly also noted, however, that the RFA welcomed 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 Department 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 socioeconomic activity.”
 
Kelly also noted that the RFA intended to closely monitor provincial governments’ spending on the secondary road network, as RFA members often find the network between smaller towns in dire need of upgrades.