Tax on vehicles’ carbon footprint from September
Hopefully the benefits of the emissions tax won’t be so much hot air
IN THE 2009 budget it was announced that an ad valorem carbon dioxide emissions tax on new passenger cars would be introduced. This was in addition to the ad valorem duty payable on new cars.
In this year’s budget it was announced that the tax would take the form of a flat rate carbon emissions tax as opposed to an ad valorem excise duty.
The South African Revenue Service (SARS) released the draft regulations for the tax last month. It is proposed that the effective date for this new tax will be September 1.
It is proposed that new passenger cars will be taxed based on their certified carbon dioxide emissions at R75 per g/km for each g/km over 120g/km. New passenger cars that have a carbon dioxide emission below 120g/km will not be subject to this new tax.
The tax will be payable on all new vehicles that are manufactured in SA and that are entered for home consumption, that is for use in SA, and all new cars that are imported for consumption in the country. Where vehicles are manufactured locally the manufacturer will be able to claim a refund of the full environmental levy paid provided that the vehicles are exported to a country in Botswana; Lesotho; Namibia and Swaziland (BLNS). This environmental levy will be payable in addition to the current taxes that are payable on new passenger vehicles in SA. Some of the passenger cars that will be affected by this new tax are, for example, regular passenger cars and sedans; 4x4 vehicles; golf cars; and vehicles designed for travelling on snow; and certain vehicles for the transport of goods, provided that their certified carbon dioxide emissions are over 120g/km.
A vehicle manufacturer must obtain and retain a test report from a testing laboratory in respect of the carbon dioxide emissions of each vehicle make and model manufactured by it. Every importer entering any imported new vehicle into SA must obtain such a test report or equivalent documentation issued by a testing laboratory in the country of export. These reports must be kept available for inspection by SARS and produced or submitted at the request of the commissioner for a period of five years from the date of manufacture or import of the vehicles. Local vehicle manufacturers must complete quarterly accounts on form DA 177 and submit such forms together with the form DA 75 and pay the environmental levy to SARS on a quarterly basis.
Where the local manufacturer exports affected new vehicles to a BLNS country, from a customs and excise manufacturing warehouse from duty paid stock, a refund may be set off against the levy payable at the end of each quarter. If items are exported from duty paid stock by an authorised dealer of the licensee of the customs and excise warehouse, any refund of the levy paid on the vehicle may be claimed subject to compliance with schedule 6.
Where the levy has not been paid and the local manufacturer wishes to export such new vehicles to BLNS countries, a licensed remover of goods in bond must be used to transport the vehicles for export from SA.
This new tax has been fuelled by the emphasis on environmental awareness because the government hopes to influence the types of cars on SA’s roads. The electricity levy was the first in a number of steps that are contemplated, in line with further environmental tax reforms which the government is exploring. There are indications that there will, in the future, be levies to discourage traffic congestion, along with waste water discharge levies.
Our sense is that the actual cost of the tax will simply be passed on from the manufacturers and importers to the consumer. Unfortunately for importers and local manufacturers these measures also entail more administration, which in many ways also entails the use of more electricity and paper at the end of the day. It is hoped that the government has done the necessary research to support the view that such fiscal reform will in the long run have the effect of changing behavioural patterns in order to achieve the desired objective.
Virusha Subban is a senior associate at ENS.