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Carbon Bill changes reduce tax burden

Publish date: 08 January 2018
Issue Number: 756
Diary: IBA Legalbrief Africa
Category: South Africa

A second draft of the Carbon Tax Bill has pushed out the actual imposition of the new tax and significantly reduced the tax burden in real terms, according to a City Press report. It says the new draft was released in mid-December and mostly retains the design of the first version, published in 2015 – but comes with several technical tweaks. The date for the start of the so-called second phase of carbon taxation has been moved from 2020 to 2022 to reflect the two years that have passed between the drafts. The new Bill still sets the tax at R120 a ton of carbon dioxide – and still provides allowances which, in effect, put the tax at R48 a ton at most, and at R6 a ton at least. A combination of inflation and revisions has resulted in a carbon tax that will be far lower than initially planned when a carbon tax policy was first published in 2013, notes the report. At that time, the tax was to be R120 a ton effective from 2015, escalating by 10% a year to reach R193 a ton by 2020. The new Bill says the R120 will increase by inflation plus two percentage points until 2022, which is then likely to be about 7%. That would mean a carbon tax rate of R137 a ton in 2020 – if the tax is, in fact, being levied by then.

Full City Press report