Carbon Tax to be Reviewed After Three Years

National Treasury

The carbon tax will be reviewed after three years.

National treasury recently confirmed this during a briefing in parliament on final responses to submissions and hearings on the Carbon Tax Bill.

The bill was tabled in parliament in November 2018.

The bill aims to:

•    provide for the imposition of a tax on the carbon dioxide (CO2) equivalent of greenhouse gas emissions; and
•    provide for matters connected therewith.

The bill calls for a R120 per ton carbon tax.

The tax is scheduled to come into effect on 1 June 2019.

With regard to the review, treasury clarified that it would include, inter alia, an assessment of the impact of the tax in helping to mitigate emissions, appropriateness of the rate of the carbon tax and the tax free thresholds, alignment with other mitigation instruments including the carbon budget and the interaction between the carbon tax, electricity levy and the renewable energy premium.

Treasury also announced that the trade exposure allowance regulations will soon be published for comment.

Treasury pointed out that the bill gives effect to the “polluter-pays-principle and helps to ensure that firms and consumers take these cost into account in their future production, consumption and investment decisions”.

Main changes to the bill following submissions and hearings included changes to the formula to reflect the tax-free allowances provided for the liquid fuels sector and amendment of the payment period to allow for one annual carbon tax payment.

Treasury also announced that the rules for the implementation of the tax by the South African Revenue Service will be published by March 2019.

Nedlac also briefed parliament on the jobs mitigation plan for the bill.

A task team was set up in Nedlac to develop a jobs mitigation and creation plan.

The government-proposed plan focuses on the energy sector including solar water heaters, standards and labelling of household appliances and energy efficiency in public buildings; waste management; climate resilience and ecological infrastructure; transport-related initiatives; funding and targeted labour-related initiatives.

Detail is also provided on the business and labour plans.

The standing committee on finance is to vote on the bill early next year.

Sabinet Cape Town Office

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