Not so ‘green’ with envy
Where does revenue from levies on plastic bags and electricity go?
SOUTH AFRICA’S new carbon emissions tax – which Finance Minister Pravin Gordhan set out in final form in his Budget speech in February – has already attracted much negative comment, which has ranged from the usual criticisms about how the money raised will be spent to more specific concerns about the effect on SA’s automotive industry.
A more fundamental issue in the context of the vehicle manufacturing industry is its inability to introduce more fuel-efficient engines until such time as SA’s fuel legislation and regulations permit the sale of cleaner fuels.
In light of the current allocation within the national Budget and the subsequent impact of green taxes on the environment, criticism is not unwarranted. In most cases it’s difficult to quantify the carbon revenue raised and the projects supposed to be funded by those income streams are either non-existent or hopeless failures.
SA already has the 2c/kWh levy on all electricity generated from non-renewable resources: the plastic bag levy of 4c and the taxation of less efficient incandescent light bulbs at 300c/bulb. These environmental levies are provided for in Customs & Excise, whether manufactured or imported.
More recently, the fuel levy was increased, and the tax on new vehicles will be implemented in September this year. The new carbon dioxide vehicle emissions levy will tax new passenger cars based on their certified CO emissions. If it’s more than 120 grams per kilometre (g/km) manufacturers will pay R75 for each g/km above the threshold. Vehicles certified below the threshold will incur no tax. G/km is a measure of the amount of carbon dioxide gas a vehicle emits for each kilometre travelled.
“This emissions tax will be in addition to the current ad valorem luxury tax (a duty payable on imported or locally manufactured vehicles in terms of the Customs and Excise Act) on new vehicles,” says Alison Wood, director at Werksmans Attorneys.
For example, if a vehicle that retails at an average of R164 000 and which (as is most commonly the case) has an emission level of 180g/km, the buyer will pay an additional R4 500 of emissions tax on top of the buying price. The emissions tax on vehicles emitting between 320g/km and 410g/ km of carbon dioxide – a category that includes many 4x4s and large-engine luxury cars – will range from R15 000 up to R21 750.
National Treasury stated the new tax would increase national revenue by R450m over the 2010/2011 financial year and around R1bn the following year. It also stated the purpose in imposing the tax is to make SA’s vehicle fleet more energy efficient. The tax will be extended to commercial vehicles once CO standards have been set for them.
The assumption is that if consumers are to pay more for cars that have higher carbon emissions they’ll buy those that emit less carbon, eventually transforming SA’s fleet to one dominated by energy-efficient vehicles.
Wood doesn’t believe the new tax will have an excessive impact on consumers’ choice of vehicles. “The tax adds an average of 2% to the price tag of all new passenger cars, varying with the model and carbon efficiency of its engine,” she says. For example, the emissions tax on a R250 000 car would be just more than R5 000. That would add only about R120 to repayments of R6 000/month. Finweek feels car-crazy South African consumers won’t hesitate to pay the extra amount.
In Finweek’s opinion it would be much better for the environment to put a green tax on older cars than new cars. That’s the actual target of those green taxes, isn’t it? But maybe Government is scared of offending the, proven violent, taxi industry. It’s probably far