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Carbon tax could hit South Africa within a year

22 February 2012

Matthew Gilleard - ITR

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As part of finance minister Pravin Gordhan’s 2012 budget, it was announced today that South Africa is considering the introduction of a carbon tax as early as next year.

The budget stated that a revised policy paper on a carbon tax will be published this year for a second round of public comment and consultation. The country's commitment to moving forward with this issue has already been established.

"As set out in the Climate Change Response White Paper approved by Cabinet in 2011, the need to price carbon emissions and the phasing in of a tax instrument for this purpose are accepted," the budget document said.

Wian de Bruyn, associate director at Grant Thornton's Johannesburg office, confirmed that the government intends to progress with the next steps towards introducing a price on carbon emissions.

"It seems likely that the government will be moving in the direction of a draft policy paper some time this year," de Bruyn said.

However, the implementation of a carbon tax is not going to be easy, as Australian prime minister Julia Gillard will testify.

Ben Strauss, director at Cliffe Dekker Hofmeyr, a member of the DLA Piper Group, believes there is still a long way to go.

"I think more work needs to be done and there will be a lot of resistance from business," he said. "Note that we do already have an ad valorem carbon tax on new motor vehicles."

Mark Linington, head of tax at Webber Wentzel, agreed that it is "too soon" and that there is "still too much to be considered".

Strauss went on to echo the thoughts expressed by many Australian taxpayers throughout the last year, that progressing with a carbon tax in the absence of any global accord would be disastrous for the country's economy.

"In my opinion, particularly as a developing country, South Africa cannot afford to impose a carbon tax which will increase its input costs and decrease its competitiveness globally."






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