South Africa is expected to pass its long-awaited Carbon Tax Bill this year and implement the tax in January 2019. The bill, which was released in draft form in December 2017, will be the subject of parliamentary hearings this year.
To reduce littering and discourage customers from buying plastic bags, the state is also upping the plastic bag levy by 50% to 12c per bag. This will take effect on April 1 2018.
As expected by some economists, the environmental levy on incandescent light bulbs will be boosted from R6 to R8 per bulb to incentivise South Africans to use more energy-efficient bulbs.
The vehicle emission tax, which penalises cars which emit carbon dioxide above a certain limit, will also be boosted.
In addition, the state is considering an acid mine drainage levy. The levy, which has not been formulated yet, would make polluters pay for the cost of environmental damages.
The carbon tax will be aimed at businesses and companies that emit a high level of carbon, polluting the atmosphere. Industries which rely on fuel consumption and electricity generation are the most frequent offenders.
It has been on the table since 2015 as a draft bill from Parliament. However, the National Treasury remain keen to push ahead with its implementation, and it is expected to feature in Gigaba’s budget speech.
Organisations who don’t take action to reduce their ‘carbon footprint’ will face punitive measures, and be forced to pay tax to the state for producing higher amounts of air pollution. It is ultimately designed to encourage a transition to more environmentally-friendly ways of operating in various industries.
There will be a period of grace for companies to begin implementing change. However, the first stages of the tax look set to take effect from January 2020. That gives businesses two years to comply with the law, and bring their emissions down.
The tax rate is set at R120 per tonne of CO2e (carbon dioxide equivalent) produced. To allow businesses time for transition, a basic percentage-based threshold of 60% will apply, below which tax is not payable. More information on carbon tax allowances can be found via The Carbon Report.
Producing excessive amounts of the following substances and pollutants would all require a contribution to the tax:
- Fossil fuel combustion
- Emissions from industrial process and product use and fugitive emissions
- Carbon dioxide
- Nitrous oxide
- Sulphur hexafluoride
A turning point
South Africa’s environmental resources are facing serious challenges in the form of air and water pollution as well as climate change, with the cost of pollution not being taken into consideration when determining the final price of products or services. Societies are affected as a result of excessive pollution and the current climate change challenges being experienced.
The reason for the implementation of carbon tax is twofold:
- It enables South Africa to meet its nationally-determined 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 eradicate poverty.
- It aims to address the issues regarding “greenhouse gas (GHG) emissions” and intends to reduce South Africa’s GHG emissions in line with the National Climate Change Response Policy and Development Plan.
By Jan Cronje, Tom Head and Candice Gibson