SA carbon tax yet to be effective

SOUTH Africa’s carbon tax, which begins today, is a critical tool in the fight against climate change, but the first phase of it is “destined to fail” to drive a rapid shift to a low-carbon economy.

“The reasons are simple,” said Noelle Garcin, the project manager of Action 24 – Active Citizens for Responsive Legislatures, co-funded by the EU.

“Until December 2022, the tax rate is set at R120 per ton of CO2 equivalent (tco2e) of the greenhouse gas emissions, with annual increases as per consumer price inflation.

“Yet research by the High-level Commission on Carbon Prices indicated in 2017 that a minimum carbon price should be in the range of R550-R1 110 per tco2e by 2020, if it is to be effective to achieve the Paris Agreement’s temperature increase target of ‘well below 2ºc’,” said Garcin, in a statement released by African Climate Reality Project.

“In addition, the number and scale of tax rebates applicable during the next two years undermine the effectiveness of the carbon tax system by offering significant rebates (from 60% to 95%) to most of the industries that are in fact the heaviest carbon emitters.”

Garcin said the low tax rate and excessive rebates in the carbon tax as implemented until 2022 would render it ineffective at “leveraging a reorientation of the whole economy in a lower carbon direction, in a time frame consistent with the urgency of climate change” and South Africa’s commitments under the Paris Agreement.

“For a fair contribution to keeping global warming within ‘manageable’ levels, South Africa needs to halve its carbon emissions in the next six years… Unfortunately, in its current form, the carbon tax will not help us achieve that.

“For an effective and just carbon tax that serves the interests of all our fellow citizens and the planet, we must rather make the carbon tax more stringent to effectively put the social cost of carbon onto the emitters rather than the poor, while introducing measures that soften the blow for the economically marginalised.”

This included reducing the VAT rate, which had a disproportionate impact on the poor, or conditioning rebates to demonstrated increased employment.

Action 24 had submitted its comments to Parliament and the National Council of Provinces, as they reviewed the Carbon Tax legislation before it was passed last March.

“Unfortunately, the legislator seems to have bought into the misguided idea that we need trade-offs between environmental sustainability and economic growth – when in fact they walk hand in hand.”