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The National Treasury has indicated it will implement another tax, Carbon Tax, early in 2018. Projections show this tax will add R13.7 billion to the fiscus in an effort to reduce Green House Gas (GHG) emissions threatening Climate Change.

While we support efforts which effectively reduce pollution and GHG emissions, we do not believe Treasury’s Carbon Tax initiative will help reduce GHG emissions in the medium to long term. The structure of this Carbon Tax, which is not ringfenced and directed to support or generate initiatives to combat GHG will, without a doubt simply disappear into the general tax pot.

Furthermore, we believe adding a Carbon Tax to the cost of business will not necessarily change behaviour (i.e. reduce an organisation’s emissions). The cost of a Carbon Tax will more than likely be passed onto the consumer.

If a new tax is not neutral in impact on society, does not change the behaviour it is intended to or is not used to secure a beneficial outcome for society in the areas the tax is applied, then it is an irrational, unnecessary. By all definitions, Carbon Tax is an unjust tax and should be challenged.


South Africa has become an overtaxed society and additional taxes which are not fit for purpose or add to the tax burden, simply add more burden to the country and thereby makes the nation less competitive.

The major concerns we have with the Carbon Tax are:

  • This will not be ring-fenced for use or investment in greener energy production technologies/industries, which will help the nation reduce GHG emissions and improve on energy supply. The Carbon Tax design does not provide sufficient incentive for investment into emission reduction activities which include Energy efficiency, Renewable Energy, Fuel Switch projects, Recycling, Waste to Energy etc.

  • The primary objective of the tax of reducing pollution (and more specifically carbon emissions) will not necessarily be achieved.

  • Eskom’s electricity price increases over the past few years (at around 700% in a decade) have effectively become a tax on society and these sizable increases have had the impact on behaviour change (at business and household consumption level), to reduce emissions through the myriad of actions and energy reduction initiatives to simply reduce the high cost of energy consumption .

  • Carbon Neutral Companies, i.e. those who invest in carbon off-set projects, do not fully benefit from this Tax. In other words, an organisation that has invested in a UN Climate Chane Convention approves carbon offset project, to fully negate their GHG emissions to become Carbon Neutral, will still have to pay the Carbon Tax. Thus, the Carbon Tax will do damage to the carbon offset initiative and schemes set up internationally, to tackle GHG emissions.

  • All the revenues collected from Carbon Taxes will be allocated to Treasury’s national revenue “pot” and will be used as and how Treasury sees fit. As we know, the SA Government doesn’t have a good track record in the way tax money is spent, in that there are countless cases of maladministration, fraud and corruption throughout all levels of Government, to which the Carbon Tax revenues will flow.

  • South Africa, being a developing country, also has more complex issues as there are some specific consumer needs and demands that will not be reduced easily, such as transport and the need for electricity.

  • This tax will be escalating the fuel price with another 11c/liter on petrol and 12.9c/liter on diesel and thus the Carbon Tax will have a ripple effect on production prices, with costs passed to the consumer, while the higher price can also contribute to a steeper inflation rate, trying to force those to change their consumption patterns. The assumption or belief that consumers will change their consumption/travel behaviour is a fallacy in that the fuel levy has almost doubled in the past decade, yet in the absence of alternative safe and reliable public transport, vehicle use remains high.

  • In addition to the Carbon Tax applied, the cost of auditing and the carbon emission verification processes would have to be carried by the business sector. As it is, the administrative complexity and burden of tax reporting in South Africa has reached high levels and become a serious cost to business. This tax will add further complexity and operating expenses to business.


It would be wrong to sit back and witness the introduction of another ineffective tax which further adds stress to an over-burdened society. As such, we will engage in the policy submission process and lobby government for the following:-

  • To amended the Caron Tax Bill to ensure the bulk of revenue from this tax is allocated or ring-fenced for effective and transparent investment in the green economy.

  • To ensure carbon offset investment is stimulated through the equitable allocation of Carbon Tax reductions in line with the amount invested in UNCCC verified carbon offset projects.

  • To request verification processes are optimised to ensure minimal impact on business processes and administration costs.

  • We will engage in Public Participation Processes and provide input and recommendations on proposed legislation.

  • We will consider initiatives to mobilise the necessary resources as to oppose the implementation of such an act if our requests for amendments are not adequately met.

We urgently request big companies and their respective industry associations to assess the impact and burden of Carbon Tax on their businesses and to seriously question the need for yet another regressive tax on society. It is essential all affected parties comment on the proposed regulations and legislation in order to ensure sufficient public participation.


This article, which provides an overview of the failed Plastic Bag Tax/Levy, expresses precisely why a ring-fence should be applied to the Carbon Tax. Unless this tax is properly set aside and accounted for, to finance real initiatives that will drive GHG reductions, the tax becomes a meaningless feed into the general Treasury Tax pot, wasted and will be a loss for the green energy initiative.


This report is OUTA’s submission to the Department of National Treasury, who have requested input from the public on the Draft Carbon Tax Bill. It contains OUTA’s opinion and concerns related to the results of an initial review of existing industry and academic commentary regarding the Carbon Tax Bill, released for comment on 2 November 2015.