Gordhan announces environmental levy increases

Submitted by: Simphiwe Ngwenya, Tuesday, March 8, 2016

Increases were announced to several environmental levies by Finance Minister Pravin Gordhan when he delivered South Africa’s annual budget speech on the 24th February 2016.  Besides increasing revenue, environmental taxes and levies are designed to encourage businesses and individuals to reduce resource consumption. The proposed increases in environmental taxes and levies announced by the Minister included:

  • Increase of 30 cents a litre of the general fuel levy from 6th April 2016.
  • Introducing a tyre levy of R2.30 per kilogram of tyre from the 1st of October 2016.
  • Increasing the incandescent globe tax from R4 to R6 per globe from the 1st of April 2016.
  • Increasing the plastic bag levy from 6 cents to 8 cents per bag from the 1st of April 2016.
  • Increasing the new vehicle emissions tax rate for passenger vehicles from R90 to R100 for every gram of emissions/km over 120gCO2/km and, from R125 to R140 for every g/km exceeding 175 gCO2/km. This tax increase is due to be implemented on the 1st April 2016.

Plastic Bag Levy

The levy on plastic bags was introduced in 2004 as a mechanism to encourage reuse and recycling while mitigating the environmental impacts of plastic bag pollution. Since 2004, the levy has  reduced the number of plastic bags produced and imported in South Africa. In 2014, former Finance Minister Nhlanhla Nene stated that since implementation, the plastic bag levy had resulted in a decline of plastic bag use from 10 billion to four billion per annum.  National Treasury has announced an increase in the plastic bag levy from 6 cents to 8 cents per bag.

Incandescent Globe Tax

The environmental levy on incandescent globes was introduced in 2009 in order to encourage South African consumers to purchase more efficient compact fluorescent bulbs and reduce electricity demand. It has been announced that this levy will increase from R4 to R6 per globe.

Tyre Levy

The tyre levy is intended to contribute towards the reuse, reduction, and recycling of tyre waste and discouraging disposal to landfill. A levy of R2.30 per kilogram of tyre has been proposed. National Treasury states that the levy will replace the current fee arrangements for tyres, as regulated by the Department of Environmental Affairs. Presently the Recycling and Economic Development Initiative of South Africa (REDISA) is responsible for implementing the Integrated Industry Waste Tyre Management Plan (IIWTMP) and collects a waste tyre management fee which funds various tyre recycling and research initiatives. Regarding the way forward for REDISA and the tyre management fee, Stacey Davidson, Director at REDISA explained, “REDISA management would like to take the opportunity to communicate that it is business as usual for REDISA, and our network. Discussions between ourselves and the Department of Environmental Affairs are ongoing with regards to implementation of any adjustments to the waste management fee.”

New Motor Vehicle emissions tax

The new motor vehicle emissions tax aims to encourage consumers to purchase more fuel-efficient, low-carbon-emitting vehicles, as well as manufacturers to improve fuel efficiency by placing a tax on the sale of new vehicles.  The vehicle emissions tax places a cost on the negative environmental impacts caused by the combustion of fossil fuels and enables greenhouse gas emitters to account for their emissions. The new vehicle emissions tax rate for passenger vehicles will increase from R90 to R100 for every gram of emissions/km over 120gCO2/km and, from R125 to R140 for every g/km exceeding 175 gCO2/km.    

Carbon tax

The proposed carbon tax, which is aimed at pricing carbon so that polluters carry the carbon emissions costs, will not be implemented in the coming year.  A draft Carbon tax Bill has however been published in November 2015 and will be revised in the year ahead to accommodate public comments received. 

General Fuel Levy

The increase in fuel taxes is intended to raise the general revenue, fund compensation for road accidents, and assist with addressing pollution and vehicle congestion.  The general fuel levy will increase by 30c a litre from 6th April 2016.   

More details on the South African 2016 budget can be found on the National Treasury website.

To keep updated with sustainability news subscribe to the fortnightly Urban Earth Newsletter.

Simphiwe Ngwenya