The KPMG Green Tax Index ranks countries according to the extent to which they use their tax systems to drive sustainable business behaviour and achieve green policy goals.
The Treasury has calculated that last year South Africans paid R11bn in unofficial carbon taxes. Carbon dioxide, the most ubiquitous of the greenhouse gases linked to climate change, has become a proxy for them all.
Last week the Treasury released a long-awaited second discussion document on what the new carbon tax should look like. The new proposal raises the thresholds beyond which the tax is payable, allows offsets and suggests “recycling” revenue into incentives and subsidies to invest in low-carbon technologies.
However, business warned that despite the lower rate, the proposed tax would raise the costs of doing business in South Africa.
The government has long viewed transforming South Africa from a resource-dependent economy to one that is “green” as a way of creating jobs and new economic sectors. The country published its first National Climate Change Response Strategy in 2004, and late in 2011 the National Development Plan highlighted the “green economy” as a solid source of jobs for South Africa.
South Africa’s unemployment rate hovers near 25% and measured 25.2% in the first quarter of the year, according to Statistics South Africa. The Treasury last year allocated R800m, to be managed by the Development Bank of South Africa, to South Africa’s Green Fund.
The six countries that top the KPMG index are the US, Japan, Britain, France, South Korea, and China, but South Africa ranks ahead of countries, such as Australia, Finland, and Singapore. South Africa ranks third on water efficiency, third on pollution control and ecosystem protection, fourth on energy efficiency, and sixth on carbon and climate change.
“It should also be noted that South Africa has many green tax instruments in the pipeline; soon to be implemented is the proposed carbon tax and the energy efficiency tax incentive,” KPMG said, and there was “a strategic imperative” for companies to understand the carbon-tax environment and its implications for their business.
The Treasury has proposed a tax of R120 per ton of carbon above the tax-free threshold — generally 60%, but 70% for Eskom — and the ability to offset emissions, for example through a carbon trade.
However, Democratic Alliance finance spokesman Tim Harris warned last week that South Africa should not consider any new tax, “no matter how well intentioned”, until economic growth recovered.
“The DA will oppose any tax increases over the next three-year budget cycle and until our economy improves its growth performance,” he said.
This article originally appeared in the bdalive.co.za 09/05/2013