A flat rate, carbon emissions tax is to be introduced on new passenger vehicles sold in South Africa as from 1 September.
A flat rate, carbon emissions tax is to be introduced on new passenger vehicles sold in South Africa as from 1 September.
This was announced by Finance Minister Pravin Gordhan in his budget speech earlier this year which proposed several environmental taxes.
New passenger vehicles are proposed to be taxed based on their certified carbon dioxide (CO2) emissions at R75 per g/km for each g/km above 120 g/km.
This forms part of government efforts to limit greenhouse gas emissions as well as assisting to increase tax revenues that have declined sharply due to the recession.
Gordhan reportedly gave notice in his February Budget Speech that a discussion document on carbon taxes would be released at the end of July.
The media has featured comments that are not too favourable of this new tax. The director of the National Association of Automobile Manufacturers of South Africa, Nico Vermeulen was quoted as saying, “The industry is currently emerging from one of the deepest and most severe recessions in its history and the introduction of additional taxes… if they are too punitive, [will]result in the industry lapsing back into recession.”
He also added that additional taxes usually meant higher prices, which could knock sales volumes and curb job creation.
Rhodes Investec Business School Lecturer, Simon Taylor who lectures on sustainability practises for businesses said that this new tax regime is pointing ahead to the use of more fuel-efficient vehicles that emit less CO2.
According to Taylor, through man’s activities such as driving our cars, factories and coal stations we are emitting a great deal of CO2.
These activities have caused the outer layer of the earth’s atmosphere to become thicker, trapping large amounts of the sun’s rays and only a little escaping resulting in a temperature increase.
“With the increase of temperature we are having impacts on climate. Some of the evidence that we have is drought, for example the Eastern Cape is having a bad drought due to water evaporation and a lack of rain.
More climate related issues include tornadoes and cyclones that wipe out huge areas and so many more other changes.
Taylor explains that the initiative is busy establishing projects that will reduce CO2, thereby modifying the increase in temperature.
The use of renewable energy such as wind energy can automatically reduce carbon emissions which reduces CO2 – ultimately creating a knock-on effect.
Additional proposed environmental taxes and charges include a waste water discharge levy, pollution charges, levies on various products’ waste streams, a landfill tax to be implemented at municipal level, and traffic congestion charges.
