ENVIRONMENTAL REFORM: Carbon tax on new cars is just the start
AN ad valorem carbon tax on new passenger cars was just the start of environmental fiscal reform, with debate on a comprehensive carbon tax set to continue this year, the Treasury said yesterday.
The carbon tax on vehicles will be payable from September, and will range from 0,6% to 4,1%, depending on how much the cars emit. The tax will apply initially to passenger cars, but be extended to commercial vehicles once agreed carbon emission standards for them have been set.
The budget review said the main objective of the revised tax proposal was "to influence the composition of SA's vehicle fleet to become more energy efficient and environmentally friendly".
Treasury chief director Cecil Morden said it was decided to convert from ad valorem tax to a flat rate as an ad valorem system would be based on the vehicle price and the tax would then become a tax on luxury cars rather than a carbon tax.
The Treasury had received strong arguments for a flat rate on emissions rather than a tax based on vehicle value, Morden said.
A discussion document on the feasibility of a more comprehensive carbon tax would be published in the first half of this year, the Treasury said.
Although the government prefers a carbon tax, a discussion document on the possible scope and administrative feasibility of emissions trading in SA will also be released for public comment towards the end of this year.
Other environmental taxes and charges are also under consideration.
These could include a waste- water discharge levy in terms of the Water Act; pollution charges under the new Air Quality Act; levies on the waste streams of various products; a landfill tax at municipal level; and traffic congestion charges.
Peet du Plooy, trade and investment adviser for the World Wide Fund for Nature, said a carbon tax would be an appropriate measure for SA, and relatively cheap and easy to implement.
A carbon tax would be complementary to monetary policy, and it would also help to augment it as it would directly tax consumption. This would also be a master instrument to steer the economy away from carbon intensity, he said.
"It might not change consumption immediately, but it will change your investment decisions," said Du Plooy.
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