New ve­hi­cle own­ers see red over green tax

Con­sumer bears the brunt of the tax on ve­hi­cle emis­sions

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW - Virusha Sub­ban Virusha Sub­ban is a se­nior as­so­ci­ate at ENS.

THE ef­fec­tive date for the new car­bon diox­ide emis­sions tax was Septem­ber 1 2010, and the South African Rev­enue Ser­vice (SARS) is see­ing green — as in the colour of money.

A quick glance at the web­sites of a few mo­tor ve­hi­cle man­u­fac­tur­ers shows that the price of new ve­hi­cles refers to this tax as an added cost. For ex­am­ple, the sell­ing price of a new lux­ury Ger­man sedan in the re­gion of about R300 000 will now be in­creased by an ad­di­tion of about R6 000 car­bon tax to the price tag. The car­bon emis­sions tax will dif­fer from ve­hi­cle to ve­hi­cle depend­ing on the level of car­bon diox­ide emis­sions. Mo­tor ve­hi­cle man­u­fac­tur­ers can hardly ab­sorb yet an­other tax bill in the wake of the global eco­nomic melt­down and are sim­ply pass­ing the tax cost onto the con­sumer.

The draft reg­u­la­tions in­di­cated that the tax will be on new pas­sen­ger cars and will be based on their cer­ti­fied car­bon diox­ide emis­sions at R75 per g/km for each g/km over 120g/km. Ac­cord­ing to the ac­tual amend­ment to the SARS tar­iff which stip­u­lates the tax and which ve­hi­cles are tax­able with ef­fect from Septem­ber 1, there is now pro­vi­sion for the tax to ap­ply to “dou­ble cab” ve­hi­cles as well. The rate of emis­sions tax on “dou­ble cab” ve­hi­cles is higher at R100 per g/km for each g/km over 175g/km.

Ac­cord­ing to the amend­ments to the SARS tar­iff which pro­vides for the car­bon emis­sions tax, the ve­hi­cles that are tax­able for their car­bon emis­sions are:

Mo­tor cars and other mo­tor ve­hi­cles for the trans­port of per­sons of head­ing 87,03, in­clud­ing sta­tion wag­ons and rac­ing cars; and

“Dou­ble-cab” ve­hi­cles with a mass not ex­ceed­ing 2 000kg or a GVM not ex­ceed­ing 2 000kg or a GVM not ex­ceed­ing 3 500kg or of a mass not ex­ceed­ing 1 600kg or a GVM not ex­ceed­ing 3 500kg per chas­sis fit­ted with a cab.

The “dou­ble cab” has now been de­fined to mean a mo­tor ve­hi­cle which has:

A sep­a­rate en­closed area de­signed for pas­sen­gers in the front and in the rear be­hind the driver; and

A sep­a­rate open or en­closed area for goods. The tax does not ap­ply to: Ve­hi­cles for the trans­port of 10 per­sons or more in­clud­ing the driver of head­ing 87,02, for ex­am­ple, taxis;

Am­bu­lances and hearses of head­ing 87,03; and

All other ve­hi­cles for the trans­port of goods of head­ing 87,04

This new tax has been fu­elled by the in­creased em­pha­sis on en­vi­ron­men­tal aware­ness be­cause the govern­ment hopes to in­flu­ence the types of cars on our roads in an ef­fort to ul­ti­mately con­trol green­house gas emis­sions.

It is de­bat­able whether or not it is eth­i­cal for the tax­man to try to shift our moral com­passes by sim­ply slap­ping us with ad­di­tional taxes.

The tax will be payable once only — when new cars are pur­chased. Buy­ers of sec­ond-hand ve­hi­cles will not be faced with this tax. The ques­tion re­mains: will more South Africans there­fore be in­clined to opt for sec­ond-hand mod­els and will we see older cars on our roads? Will more of us opt to make hearses, am­bu­lances and taxis our daily mode of trans­port sim­ply be­cause they are cheaper to ac­quire? Will dou­ble cab fa­nat­ics bear the brunt of in­creases in the price of new dou­ble cabs? More im­por­tantly, will our mo­tor in­dus­try over­come this new hur­dle in its ef­forts to shrug off the af­ter­shock of the global eco­nomic re­ces­sion? Only time will tell.

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