The proposed tax follows the undertaking by government to reduce south africas carbon footprint by an ambitious 34% by 2020. It contains the countrys energy tax profiles, followed by countryspecific information to complement the general discussion in taxing energy use 2018 oecd, 2018. The proposed introduction of carbon tax could have a severe impact on the economy and job creation in south africa, sacci said on monday. Jan 10, 2018 south africa is bracing itself for a new carbon tax. The national treasury has released its draft carbon tax bill for public comment, which must be submitted by the 15 december 2015 deadline. Taxes on road transport in southern african countries. Carbon offsets will make sa economy greener treasury fin24.
Carbon tax act 15 of 2019 english afrikaans south african. The ndc requires that emissions peak in 2020 to 2025, plateau for a ten year. The gradual phasing in of the carbon tax can reduce south africa s ghg emissions by between 35 per cent. Economic impacts of introducing a carbon tax in south africa. Go, sherman robinson, karen thierfelder1 may 6, 2009 abstract noting that south africa may be one of the few african countries that could contribute to mitigating climate change, we explore the impact of a carbon. Carbon taxes in south africa overseas development institute. Today the south african finance minister, tito mboweni, postponed the implementation of south africa s carbon tax for six months in his first mediumterm budget policy statement given on behalf of the south african treasury. Introducing carbon taxes in south africa sciencedirect. As such, the industry sectors which are affected by the bill are farreaching. Government has indicated that the proposed carbon tax will be implemented by mid2016. Commitment to competitiveness the carbon tax has been designed to try to ensure. Tax alert indirect taxes pwc 2 carbon tax act same ipcc code occurs.
During the budget, the minister confirmed that the carbon tax will be implemented on 01 june 2019. Republic of south africa draft carbon tax bill as introduced in the national assembly proposed section 77 the english text is the official text of the bill. Since its implementation, the impact of carbon tax on the corporate social investment csi. South africa carbon tax compliance required even where no. Petroleum%20pipelines%20levies%20act%2028%20of%202004. Draft carbon tax bill released tax deloitte south africa. The interface between a carbon budget approach and a. The aim is to reduce emissions in terms of south africas commitment made at the copenhagen conference.
These allowances may not exceed 95 percent of the total greenhouse gas ghg emissions of the taxpayer. Since the 1st of september 2010 all new south african vehicles have been subject to a carbon emissions tax instituted by the government to increase the drive towards cleaner running and less polluting vehicles. As south africas carbon tax is delayed again what is the. South africa s longdelayed carbon tax has been enshrined in law, the treasury said on sunday, as one of the continents worst polluters transitions to lower emissions in its efforts to meet. Tis gaette is also available free online at a 2 no. Carbon tax policy implications for economic growth and unemployment rates in south africa. South africas government has put in place a number of support measures to ease the transition into the carbon tax regime. South africa s carbon tax set to go into effect next week president cyril ramaphosa signed the measure into law on sunday. In addition, south africa already has a sort of carbon tax in the electricity levy. The south african carbon tax turn carbon tax risk into opportunities what is a carbon tax. The first is to allow companies to mitigate its financial liability in terms of the proposed carbon tax. Remuneration for services rendered outside south africa with effect from 1 march 2020, sa residents working abroad for more than 183 days over a 12month period, and for a continuous period of more than 60 days during that period, are exempt from income tax on remuneration for services rendered while.
The carbon emission tax is already included into the price of every new vehicle that is sold in south africa. Jan 18, 2018 the public participation process has been extensive and parliamentary public hearings are expected to take place in the next couple of months. Calls for the introduction of a carbon tax into the tax lexicon in african countries may not have come any sooner. How south africas new carbon tax will hit petrol prices. Cliffe dekker hofmeyr no more delays, carbon tax in. With south africa s commitment to tackling climate change, the tax engenders the polluterpays principle.
The climate change response white paper makes provision for both carbon tax and offsets to be developed in the journey towards a low carbon, climate resilient south africa. Structure of the south african carbon tax proposal. This note describes the taxation of energy use in south africa. Jun 20, 2016 cape town governments proposed carbon offset system is in line with efforts to help south africa make the transition to a low carbon, greener economy, maintained national treasury. Companies that wish to reduce their carbon tax bill can do so by subscribing to the carbon offset scheme. South africas draft carbon tax bill calls for an initial marginal carbon tax of r120 per ton 2 of co 2 produced, with that amount potentially reduced by various allowances and offsets. Register for efiling and you will be automatically registered for personal income tax and receive a tax reference number. For example, for the mining, iron and steel industries, the carbon tax will have an impact on the 12 december 2018 indirect tax alert south africa s carbon tax to be effective 1 june 2019 and. The gradual phasing in of the carbon tax can reduce south africas ghg emissions by between 35 per cent. Carbon pricing within the ndc context south africa signed the paris agreement in april 2016 and endorsed the submission of its nationally determined contribution ndc. Pdf carbon tax implications on corporate social investment. Generally the carbon tax will result in emission reductions, and depending on revenue recycling assumptions the impact on economic output growth will be neutral to a small negative. Carbon excise tax was implemented on all passenger motor vehicles in south africa as of 1 september 2010. This report begins with the premise that a carbon tax will be introduced as the mainstay of south africa s carbon mitigation effort.
After having been the subject of various discussion papers since 2011, the introduction of a carbon tax in south africa is becoming a reality with the release of the draft carbon tax bill draft bill earlier this month. The carbon tax bill is part of south africa s commitment to reduce greenhouse gas ghg emissions below business as usual by 34 per cent by 2020 and 42 per cent by 2025. Head of global tax desk network, europe, middle east, india and africa emeia. South africas carbon tax policy proposal an update national.
The treasury published a second draft in december 2017, for consultation until march 2018. Carbon taxation as a tool for sustainable development in. The policy is designed not to increase the total tax burden, and thus. Full document pdf tables excel overview of revenue collections. Pdf carbon tax policy implications for economic growth. Carbon tax preparing for the tax south african tax guide. Jun 05, 20 this article contains the key design features of the carbon tax as set out in the policy paper. A burning issue finance minister tito mboweni delivered his maiden budget speech on 20 february 2019.
South africa is considering introducing a carbon tax to reduce greenhouse gas emissions. South african ct overview administration of the carbon tax act. Review published literature in order to understanding the need for the levying of a carbon emissions tax in south africa. Policy documents published by the south africangovernment mention the potential use of carbon offsets in two applications. Following a discussion of the motivations for considering a carbon tax, we evaluate potential impacts using a dynamic economywide model linked to an energy sector model including a detailed evaluation of border carbon adjustments. Stakeholder engagement in designing the south africa carbon tax.
The reason for the implementation of carbon tax is twofold. The additional carbon tax will also trickle down into cost of living everyday i. South africa for example has developed a robust proposal aimed at introducing a carbon tax system by 2016. As south africa waits to receive communication from treasury regarding the date of implementation of the carbon tax, 1 the question is whether carbon emitters carbon taxpayers would be expected to submit carbon tax returns to the south african revenue services sars when no net carbon tax payment is due. South africa has also proposed legislation pdf for a carbon tax, which was originally mooted in a national treasury discussion paper in 2010. The paper, an update of a discussion paper released in december 2010, described in detail one of south africas efforts to respond to anthropogenic climate change and transition to a green economy. If not au fait with emissions and emissions calculation methodologies, the services of a carbon consultant will help you navigate this process. South africas climate change response white paper, 2011 3.
It enables south africa to meet its nationallydetermined contribution commitments as required by the 2015 paris agreement on climate change paris agreement which comes into operation in 2020, and aims to collectively address the threat of climate change within the context of sustainable development and includes efforts to. The shortage of skilled labour in south africa continues to restrict the ability of the economy to expand output and employment. How sas new carbon tax will affect petrol and electricity prices. The project has been funded by the british high commission in pretoria. Carbon tax in south africa no longer just hot air the. Tax policy to reduce carbon emissions in south africa shantayanan devarajan, delfin s. Carbon tax preparing for the tax october 23, 20 nyasha musviba the carbon tax to be introduced on 1 january 2015 is the biggest change to the south african tax landscape since the introduction of capital gains tax in 2001. November 2015 2 background in 2002, the tax policy unit of the national treasury initiated a study on the potential for environmental fiscal reform in south africa, focusing on the role of the tax system in contributing towards achieving environmental objectives at the lowest overall cost to the economy.
Economic implications of carbon taxes in south africa. The bill introduces carbon tax in phases with the first phase now proposed to end in 2022. Following a discussion of the motivations for considering a carbon tax, we evaluate potential impacts using. Preemptive mitigation policy, such as a carbon tax, would allow south africa to avoid being disadvantaged in global markets. As expected, the introduction of south africa s carbon tax will see an additional 9 cents per litre on petrol and 10 cents per litre on diesel added however, this change will come into. The tax affects the rents from capital the hardest. South africas carbon tax to be effective 1 june 2019 and. S outh africa has been a pioneer on climate change policy internationally, despite being a carbon intensive developing country.
You will soon be taxed r280 every time you fill up with petrol. Taxation may involve payments to a minimum of two different levels of government. Domestic border tax adjustment on embodied carbon as above, but rebate exporters and tax imports at same carbon tax rate 3. We are supportive of measures to reduce carbon emissions in principle, so long as those measures remain tax neutral, sa chamber of commerce and industry sacci ceo neren rau said in a statement. Jun 25, 20 this carbon tax policy paper is an update of the carbon tax discussion paper published for comment in december 2010. Tax incentives the first phase of the carbon tax implementation will be accompanied by tax incentives to lessen the impact on energy intensive sectors. In south africa, there is considerable ambiguity and debate about the implications of tax distortions in the economy and the tax interaction effects arising from the carbon tax. In short, the discussion of carbon taxation in south africa can focus on considerations other than the economic welfare costs, which are likely to be quite low. The carbon tax bill the bill addresses measures that government is taking to meet its nationallydetermined contribution in terms of the 2015 paris agreement on climate change. With south africa s commitment to tackling climate change, the tax. South african carbon tax finally becomes law reuters. South africa is not alone in its climate and carbon tax endeavours by november 2018, 46 national and 24 subnational jurisdictions had already put a price on carbon.
The ct is administered as if the ct is an environmental levy as contemplated in section 54a of the customs and excise act. Aug 11, 2015 the carbon tax has the danger of being viewed as another form of tax. South africas carbon tax set to go into effect next week. South africa therefore has a longrun incentive to support global mitigation and a shortrun incentive to be part of the coalition of mitigating countries. The introduction of the carbon tax will have implications for all south african business sectors. The carbon tax will be administered by the south african revenue service. The south african government has introduced a carbon tax effective 1 june 2019 with the objective to reduce harmful greenhouse gas emissions. The president has signed the carbon tax act into law, which will be effective from 1 june 2019. The report, thus, does not deal with the design of overall climate change mitigation policy in south africa, but rather with a very specific subset of mitigation policy. Ieta greenhouse gas market 20 complementary measures. There must be levied and collected for the benefit of the national. The interface between a carbon budget approach and a carbon tax.
Carbon taxes in south africa the political and technical challenges of pricing carbon smita nakhooda usual dev south africa has been a pioneer on climate change policy internationally, despite being a carbon intensive developing country. Development of a south african carbon offset trading. Taxpayers are liable for carbon tax should they conduct one of the activities in schedule 3 of the carbon tax act act no. Carbon tax in south africa south african tax guide. South africas carbon tax policy proposal an update. Visit our youtube channel for easy help on everything digital. Still to be decided projects in south africas offset market source. The carbon tax bill will come into effect in from 1 june 2019 bringing. The implementation date had previously been set as 1 january 2019. How south africa s new carbon tax will hit petrol prices from june and beyond. In 2010, it began a process to develop a carbon tax to help put a price on carbon, and incentivise the behavioural changes needed to support a transition away from business as usual development. Carbon tax will inflate mining sectors tax bill by far less. The bill has been years in the making with lots of.
Econometrix has submitted an updated report on the update report 20 of the integrated resource plan for electricity, irp 2010 to 2030, which spells out the damage a. The public participation process has been extensive and parliamentary public hearings are expected to take place in the next couple of months. Nov 26, 2015 after having been the subject of various discussion papers since 2011, the introduction of a carbon tax in south africa is becoming a reality with the release of the draft carbon tax bill draft bill earlier this month. South africas tax challenges arise from forces familiar to tax policymakers around the world. The operation of emission generation facilities at a combined. These aggregated statistics are compiled from sarss registers of taxpayers and from tax returns. Leandi kolver clarity on the design of south africas carbon tax policy could be a feature of the 201415 national budget to be presented by finance minister pravin gordhan in february, professional services firm deloitte said at its prebudget event on wednesday.
This being the case, if south africa were able to remove some of the distortions in the labor market, the cost of carbon taxation would be negligible. South africa exploring the 2016 planned carbon emissions tax. South africa 1 taxing energy use 2018 south africa this note describes the taxation of energy use in south africa. Rand slides as zuma resignation talk is dismissed next article. While transitioning, 60% of emissions will be tax exempt up to 2022 to lessen the impact on industry. Heres what you need to know get to know the governments latest antipollution measures. Some 40 countries have adopted various programs aimed at changing the. It is globally recognized as a core carbon pricing policyinstrument for reducing. The carbon tax is a cornerstone of south africas plan for reducing its greenhouse gas emissions. Summary of comments on 20 carbon tax policy paper 7. Effective tax rates on energy use in national currency and eurgj, 2015. The national treasury and sars jointly publish tax statistics annually.
Tax on dividends in specie remains the liability of the company declaring the dividend. Tax alert revised carbon tax bill pwc south africa. A carbon tax will reduce economic growth in south africa with detrimental consequences to employment and potentially to the social and political stability of the country. Taxes on road transport, in sijbren cnossen ed 2006 excise tax policy and administration in southern african countries. The interface between a carbon budget approach and a carbon tax 28 january 20. Depending on the recycling option, the tax has almost neutral effect on employment. The south african revenue services sars list of the six main threats to the personal income. A carbon tax is a fee imposed on each tonne of carbon dioxide equivalent tco2e emitted. In 2010, it began a process to develop a carbon tax to help put a price on carbon, and incentivise. This sars tax pocket guide provides a synopsis of the most important. Tax policy to reduce carbon emissions in south africa.
South africas national treasury released a carbon tax policy paper for public comment in may 20 national treasury, 20. The bill together with supporting documentation also maps out the technical workings of the tax. As south africa s carbon tax is delayed again what is the story so far. The note contains four energy tax profiles for south africa.
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