A new environmental tax focus

South Africa’s Budget 2010/11, announced on 17 February 2010, had a new focus on the environment. (The government is clearly seeing carbon taxes as a new area of revenue, but is no doubt under pressure to make good on the carbon-cutting promises to the Copenhagen conference last December.) In the Budget, a carbon tax on new passenger vehicles was announced, and the statement was made that “further research is being done to expand environmental taxes and levies”.  Further, it is believed that National Treasury already has a working group looking at a carbon tax on emissions. Talk around town is that government will implement a comprehensive carbon mitigation and adaptation strategy, supported by appropriate economic instruments like a carbon tax, in the 2011/12 fiscal year.
The following extract is from the Budget 2010/11 papers.
Carbon dioxide vehicle emissions tax
The 2009 Budget announced an ad valorem CO2 emissions tax on new passenger motor vehicles. Based on subsequent consultations, it is recommended that the original tax proposal be converted into a flat rate CO2 emissions tax, effective from 1 September 2010. The main objective of this tax is to influence the composition of South Africa’s vehicle fleet to become more energy efficient and environmentally friendly. The emissions tax will initially apply to passenger cars, but will be extended to commercial vehicles once agreed CO2 standards for these vehicles are set.  The proposed CO2 vehicle emissions tax will be implemented as a specific tax, instead of the previously proposed ad valorem tax. New passenger cars will be taxed based on their certified CO2 emissions at R75 per g/km for each g/km above 120 g/km. This emissions tax will be in addition to the current ad valorem luxury tax on new vehicles.
 
Further research is being done to expand environmental levies and taxes.

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Watch out for …

The SA Government is set to issue a green paper on Climate Change in May 2010. It will cover both mitigation and adaptation policies. Importantly, it is expected to detail how South Africa will achieve the carbon-cutting promises it made at Copenhagen in December (to cut carbon emissions by 34% from a business-as-usual scenario by 2020 and by 42% by 2025). Talk around town is that the green paper could include the following:

• A tax on carbon emissions effective from 2012.
• Mandatory carbon emission cuts on commercial buildings by 2015.
• Mandatory carbon inventory calculations (probably for bigger companies, for those instance companies with an electricity bill greater than a certain size).

In a story in Business Report on 27 January 2010, Joanne Yawitch from the Dept. of Environmental Affairs said the Copenhagen pledge figures are based on a technical document (which has not been made public) drawing from the Long-term Mitigation Scenarios and the integrated resource plan released by the Dept of Energy in December 2009. Yawitch confirmed that the pledge assumes the establishment of 100 megawatts of concentrated solar power and 200 megawatts of wind power; the introduction of independent power producers; the roll-out of solar water heaters; and achieving energy efficiency savings of 35% by 2015