President Cyril Ramaphosa has
signed the Carbon Tax Act into law and it will come into effect on June 1, the
National Treasury said on Sunday.
The Act was gazetted on May 23, together with the
Customs and Excise Amendment Act, the Treasury said in a statement.
“Climate change represents one of the biggest
challenges facing humankind, and the primary objective of the carbon tax is to
reduce greenhouse gas (GHG)
emissions in a sustainable, cost
effective, and affordable manner. Government has outlined its strong commitment
to play its part in global efforts to mitigate GHG emissions as outlined in the
National Climate Change Response Policy (NCCRP) of 2011 and the National
Development Plan (NDP) of 2012,” the Treasury said.
The Carbon Tax Act gave effect to the polluter-pays
principle for large emitters and helped to ensure that firms and consumers took
the negative adverse costs (externalities) into account in their future
production, consumption, and investment decisions.
Firms were incentivised to adopt cleaner technologies over the
next decade and beyond. The carbon tax would initially only apply to scope one
emitters, from June 1 to December 31, 2022, and the second phase from 2023 to
2030.
The design of the carbon tax also
provided significant tax-free emission allowances ranging from 60% to 95% in
this first phase. This included a basic tax-free allowance of 60% for all
activities, a 10% process and fugitive emissions allowance, a maximum 10%
allowance for companies using carbon offsets to reduce their tax liability, a
performance allowance of up to 5% for companies reducing the emissions
intensity of their activities, a 5% carbon budget allowance for complying with
the reporting requirements, and a maximum 10% allowance for trade exposed
sectors.
“The introduction of the carbon tax will also
not have any impact on the price of electricity for the
first phase. This will result in a relatively modest carbon tax rate ranging
from R6 to R48 per tonne of CO2 equivalent emitted… to
further provide current significant emitters time to transition their operations to cleaner technologies through
investments in energy efficiency, renewables,
and other low carbon measures,” the Treasury said.
A review of the impact of the tax would be
conducted before the second phase, after at least three years of implementation
of the tax, and would take into account progress made to reduce GHG emissions.
Future changes to rates and tax-free thresholds in the Carbon Tax would follow
after the review, and be subject to the normal transparent and consultative processes
for all tax legislation, after any appropriate Budget announcements by the
Minister of Finance.
The 2019 Customs and Excise Amendment Act and
Memorandum on the objects of the Act contained provisions related to the
administrative arrangements for the collection of carbon tax revenues by the
South African Revenue Service(SARS).
“It was split from the Carbon Tax Act as a separate Act for technical legal reasons related to money bills not containing administrative provisions in terms of section 77 of the Constitution,” the Treasury said. https://www.engineeringnews.co.za/article/carbon-tax-act-signed-into-law-effective-from-june-1-2019-05-27
