Carbon taxes remain on the South African agenda

Submitted by: Amanda Botes, Monday, November 7, 2011

The recently published National Climate Change Response White Paper confirms the government’s commitment to develop a carbon tax policy and highlights some of the considerations that National Treasury is taking into account. Carbon taxes will initially be implemented at low rates and then increased so that taxpayers can get used to the carbon tax system and so that the potential negative impacts on industry competitiveness are taken into account.


The overall aim of the carbon tax is to provide a strong price signal to consumers and producers to change their behaviour and produce/consume products that have a lesser impact on climate change. A carbon tax attempts to internalise the external costs of GHG emissions that are often imposed on society. The tax will also generate a revenue stream that will potentially support climate change policy and sustainable development initiatives.

A carbon tax would be in-line with existing environmentally related taxes that have been introduced by the South African Government since 2006. These have included, but are not limited to, a motor vehicle emissions tax, the electricity generation levy, a levy on incandescent light bulbs and the proposed energy efficiency savings tax allowances. National Treasury published a carbon tax discussion paper in 2010 which elaborates on the role of carbon taxes in stimulating behaviour change in producers and consumers. This paper is currently being revised to accommodate comments that have been received from the public and will be released in December 2011.

The white paper also highlights the possibility of other market based instruments being used.  In particular National Treasury will be investigating the feasibility of an emission trading scheme and is exploring different incentives for business and consumers to promote climate resilience and employment in the green economy. Through the introduction of market based instruments the government hopes that investment in cleaner technologies and industries will take place.

Click here for more blog articles on the National Climate Change Response White paper.

Amanda Botes