Picture: THINKSTOCK
Picture: THINKSTOCK

MOTOR industry insiders reacted with disappointment to Finance Minister Pravin Gordhan’s budget announcement on Wednesday that the tax on carbon emissions from vehicles would be increased, but were otherwise pleased with its general content.

National Association of Automobile Manufacturers of South Africa (Naamsa) director Nico Vermeulen said on Wednesday the measure would likely add between 0.5% and 1% to the price of a car.

In the budget review, the department said data showed "declining average CO² (carbon dioxide) emissions for passenger vehicles since the tax was introduced".

Therefore the tax on passenger vehicles’ CO² emissions would rise from R75 to R90 for every gram of CO²/km above 120gCO²/km, and for double-cab bakkies it would increase from R100 to R125 for every gram/km in excess of 175gCO²/km.

The tax hike, the first since the emissions tax introduction in 2010, would be effective from April 1.

Describing the increased emissions tax as "not welcome", Mr Vermeulen said despite this, the lack of "notable tax changes" was positive news for the industry.

Naamsa chairman Dr Johan van Zyl said the lack of "tax shocks" was "encouraging".

"The budget proposals … in fact provided generous personal income tax relief to the extent of R7.3bn. This should have a positive impact on consumer sentiment and demand," Dr van Zyl said.

Toyota spokesman Leo Kok said the firm was "opposed to carbon taxes because there is no cleaner alternative for customers".

"We build and export engines in Durban that are far cleaner than the ones we sell here in South Africa because our fuels are too dirty," he said. "Customers have no alternative."

BMW South Africa spokesman Guy Kilfoil said on Wednesday BMW "supports the taxation of CO²".

But he said "every gram should have a cost, and every emitter should pay".

Nonetheless, Dr van Zyl said the government was "undertaking to introduce support mechanisms for biofuel production and to facilitate the upgrading of oil refineries to produce environmentally friendly and cleaner fuels".

Dr van Zyl said certain elements of income tax relief in the budget were also welcome, as they would "have a positive impact on consumer sentiment and demand".

Additionally, Dr van Zyl welcomed the focus on infrastructure development, saying "the budget confirmed the importance of continued infrastructure development spending as a key area of contribution to South Africa’s future economic growth and employment".

Inefficient ports and railways have long been a cause for concern for motor vehicle manufacturers.