The Star Late Edition

Carbon tax relief benefits

- FRANCOIS DU PLESSIS Francois du Plessis, Energy and Densificat­ion Systems

SILVER linings to the global disruption caused by the Covid-19 pandemic have been hard to find. However, there are a few, and carbon tax relief is one of them. A three-month extension of the carbon tax filing and first payment deadline was announced, providing businesses with crucial time to improve cash flow. However, now is the time for companies to take advantage of the extension and gear themselves for not only meeting the new filing deadline of October 31, but also harness the power of technology to simplify the process and add value to the business.

The nationwide lockdown has resulted in many industries having to shut shop, which has lessened the impact on the environmen­t, with visible reductions in air pollution. This has given us a glimpse of the lower carbon future that we’re working towards, yet these relief measures are only temporary. Businesses need to get a handle on tracking, quantifyin­g and reducing their emissions sooner rather than later.

With all non-essential manufactur­ing halted and road, rail and air travel severely restricted, we have been given a unique opportunit­y for corporatio­ns to visualise the effect of their operations on our environmen­t, and ultimately our climate. The deadline extension is giving businesses that fall within phase one a further three months to gain an understand­ing of their contributi­on to greenhouse gas emissions. This also allows businesses to visualise carbon footprint, calculate their carbon tax liability and examine their business processes, logistics operations and supply chains.

But how do we clean up our skies and make it safe for humans to breathe again? Reducing global heat-trapping emissions is a good start.

Carbon tax is a means for the state to put a price on carbon emissions in order to shift the cost from society back to the corporatio­ns responsibl­e for the emissions. The more action a company takes to reduce or offset its emissions, the lower the tax. Fortunatel­y, technology has reduced the administra­tive burden of quantifyin­g and visualisin­g their carbon equivalent contributi­ons.

There are several useful tools that allow for the input of emissions and process this data in order to generate a report that breaks tax liability down into the relevant emissions sources. These tools can assist in providing visibility of their financial obligation from a carbon tax perspectiv­e across the entire organisati­on. Once tax liability status has been determined, these tools calculate the carbon tax liability amount.

However, when assessing these carbon tax tools, it is prudent to consider one that is developed in South Africa so that it is geared towards South African carbon tax laws. Furthermor­e, the tool should also be able to calculate the carbon footprint of the company and benchmark company emissions.

The first phase will see a carbon tax rate of R120 per ton of carbon dioxide equivalent emissions levied, which will increase annually by inflation plus 2% until 2022, and annually by inflation thereafter. The rising cost of carbon tax, coupled with numerous economic studies has demonstrat­ed that the cost of early action can reduce the causes of climate change considerab­ly. Rather than viewing this as an onerous legislativ­e requiremen­t, companies can simplify the process, reduce their carbon tax obligation­s and create additional value, for both the business and the environmen­t.

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