Draft Carbon Tax Bill out for public comment

NATIONAL Treasury has published the draft Carbon Tax Bill for public comment. This follows the announcement made by Finance Minister Nhlanhla Nene in the 2015 budget.

Cabinet approved the publication of the bill and noted that the carbon tax forms an integral part of the system for implementing government policy on climate change as outlined in the 2011 National Climate Change Response Policy (NCCRP) and the National Development Plan (NDP).

South Africa has committed to reduce greenhouse gas (GHG) emissions below ‘business as usual’ by 34% by 2020 and 42% by 2025. The country has also committed to adaptation measures, as outlined in the Intended Nationally Determined Contributions (INDCs) recently submitted to the United Nations for the upcoming Conference of the Parties (COP) 21 of the United Nations Framework Convention on Climate Change (UNFCCC) in Paris.

“The carbon tax seeks to price carbon by obliging the polluter to internalise the external costs of emitting carbon and contribute towards addressing the harm caused by such pollution.

“The Draft Carbon Tax Bill marks the next step in the consultation process conducted over the past five years, starting with the 2010 discussion paper on carbon tax, the 2013 Carbon Tax Policy Paper and the 2014 Carbon Offsets Paper,” said Treasury in a statement.

The draft takes into account comments received in writing, from meetings and workshops and from a wide range of stakeholders including business, NGOs, academia, civil society and labour.

The publication of the Draft Carbon Tax Bill provides an opportunity for further comments on the design and technical details of the carbon tax policy and administration. It should be noted that the final tax rate, exemptions and the actual date of implementation will be determined by the Minister of Finance through the annual Budget process.

The carbon tax will be implemented together with complementary measures like a reduction in the electricity levy and other measures to recycle revenue.

Stakeholders are invited to provide comments on the environmental and socio-economic impact of the carbon tax (taking into account revenue recycling measures), as well as the design and legal wording of the Bill.

National Treasury said a revised bill incorporating comments received will thereafter be submitted to Cabinet for approval for tabling in Parliament.

Treasury said the impact of carbon tax on the economy can only be assessed when taking into account both the direct impact of the tax, as well as the way the resulting revenue is spent.

To assess the impact of the tax, the revenue recycling measures must be taken into account. The carbon tax will assist in reducing GHG emissions and ensure that South Africa is ready and better prepared to deal with future climate risks and challenges and also be in a position to take advantage of new investment opportunities.

It further said that the tax aims to change the behaviour of firms, incentivising them to shift towards cleaner technology when replacing or renewing machinery, technology or processes.

The draft bill is available on the National Treasury website: www.treasury.gov.za.

Written comments should be submitted to Dr Memory Machingambi at Memory.Machingambi@treasury.gov.za by the close of business on 15 December 2015.