New carbon tax to drive behaviour change
The Act, signed into law by President Cyril Ramaphosa last week, gives effect to the polluter-pays principle
THE new Carbon Tax Act which will come into effect on 1 June, is expected to encourage behaviour change among consumers and businesses.
The Act, signed into law by President Cyril Ramaphosa last week, gives effect to the polluter-pays principle.
It helps to ensure that companies and consumers contribute towards addressing the harm caused by pollution, while taking into account the negative costs on their future production, consumption and investment decisions.
‘Climate change represents one of the biggest challenges facing human kind and the primary objective of carbon tax is to reduce greenhouse gas (GHG) emissions in a sustainable, cost effective and affordable manner,’ national Treasury said.
The tax will initially only apply to ‘scope one emitters’ in the first phase from 1 June 2019 to 31 December 2022, and the second phase from 2023 to 2030.
Scope one emitters are those organisations which emit greenhouse gases from owned or controlled plants.
‘The implementation of the carbon tax will be complemented by a package of tax incentives and revenue recycling measures to minimise the impact in the first phase of the policy,’ Treasury said.
There will be significant tax-free emission allowances ranging from 60% to 95% in this first phase.
This includes a basic tax-free allowance of 60% for all activities and a maximum 10% allowance for companies that use carbon offsets to reduce their tax liability, among others.
‘To cushion the potential impacts on energy intensive sectors such as mining, iron and steel, the introduction of the carbon tax for the first phase will not have an impact on the price of electricity.
‘It will provide current significant emitters time to transition their operations to cleaner technologies through investments in energy efficiency, renewable and other low carbon measures,’ Treasury said.
The South African Revenue Service (SARS) will be the main implementing authority on the tax liability assessment and will have access to the Department of Environmental Affairs’ emissions database.
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