South Africans should prepare for a new Carbon Tax in 2018, which will be levied on the carbon content of fuels says Izak Swart, director of Carbon Tax at Deloitte South Africa.
The Carbon Tax has cropped up in the Budget Speech in some form or another every year since 2014; however, increasing international standards alongside South Africa’s official commitment to the Paris Agreement means that the new Tax should come into effect within the coming year, said Swart.
“The World Bank now estimates that in 2016 15% of all global emissions will be subject to a tax or a pricing mechanism. The Paris Agreement has brought more pressure on all countries to conform in pricing carbon emissions, be it via a carbon tax or a carbon pricing mechanism.”
“South Africa itself has a budget deficit to deal with, and a carbon tax and other similar taxes such as a sugar tax could easily reduce the deficit significantly, thereby making it more likely that the tax will be introduced sooner rather than later,” he said.
However, the current draft Carbon Tax has several problems, Swart noted.
One of the more pressing issues is that it is unclear what level of emission a company would need to pay a carbon tax.
Swart noted that it was also not made clear who the taxpayer will actually be, with some analysts indicating that it could be groups of companies that face the burden when tax is normally levied at company level.
It is also currently unclear what the exact effect the Carbon Tax will be on a consumer-level, although similar taxes levied in the United States and Europe could see South Africans paying more for electricity, food and at the petrol pumps.