Certainty on Carbon Tax needed from this year’s Budget – Cova

20th February 2017 By: Creamer Media Reporter

With expectations of the long-awaited Carbon Tax being implemented in 2018, much more clarity and certainty will be needed from the 2017 Budget, which will be delivered by Finance Minister Pravin Gordhan on Wednesday.

Currently, much uncertainty exists, with industry questioning policy certainty, timelines of implementation and the process to be followed, with some expecting another delay in implementation, energy consultancy Cova Advisory cofounder Duane Newman said on Monday.

“2016 was a year of consultation on the tax itself, on offsets, on economic modelling. We must now see how the Bill will proceed. As well as the need for certainty about the implementation dates, the tax needs to be budgeted for.

“How much revenue is expected? And what is it earmarked for? What support will the money raised provide to companies which are reducing their carbon footprint?” he commented.

In addition to hopes that the Budget would provide the required clarity on the Carbon Tax, Newman also called for certainty on the future of the Manufacturing Competitiveness Enhancement Programme (MCEP), which was closed in October 2015.

The closure means there is an incentive gap with no support for medium-sized manufacturers with a capital investment of less than R30-million, with Cova suggesting the Department of Trade and Industry should relaunch a simpler version of MCEP or introduce a successor programme, backed by the National Treasury.

Further, Newman believes there should be increased disclosure on the amounts already paid out under MCEP and how much of the allocated budget of over R5-billion had been claimed and paid out to applicants.

“I am also hoping for some news on the 12I tax incentive. The existing budget of R20-billion is close to being fully allocated. The application window closes in December for new applications.

“We hope government does announce a replacement programme – or an extension of 12I – before its expiry,” he concluded.