Treasury stands firm over carbon tax

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Treasury deputy director-general Ismail Momoniat confirmed on Tuesday, 7 April, that the 2016 implementation date was still on track and that it would "hopefully" be releasing a draft bill within the next two months for public comment. This would allow enough time to get the bill promulgated by next year.

"We are on course to stick to the timelimes," Momoniat said.

The carbon tax could add significantly to revenue at a time of fiscal constraint as the Treasury estimates it could generate between R8bn and R30bn a year depending on final allowances and exemptions.

Treasury chief director of economic tax analysis Cecil Morden said the draft bill incorporated the structure of the carbon tax as presented in a 2013 discussion paper but included public comments gathered thereafter on design issues.

The proposed tax will hit heavy emitters such as Eskom, Arcelor Mittal and Sasol hard.

Momoniat's comments came as the Davis tax committee led by Judge Dennis Davis announced it would review the carbon tax proposals. This could offer its opponents another opportunity to air their views.

Sasol spokesman Elton Fortuin said the carbon tax as proposed was inappropriate for SA as it would reduce the country's competitiveness and lead to further increases in electricity prices. This would come at a time "when industry has to adjust to the effects of falling commodity prices and rising electricity costs".

What was needed were incentives to invest in new, more energy-efficient processes and projects to reduce emissions.

Judge Davis said the committee had received requests from a number of interested parties to review the scope and design of the proposed tax.

But the Treasury has been engaging with stakeholders on the proposals since 2013, which raises the question whether the Davis committee needs to continue working on it.

South African Institute of Tax Professionals president Keith Engel questioned the need for another platform for public consultation outside of Treasury processes. He also questioned whether the Davis committee recommendations would have "any real meaning" considering that the Treasury was already far advanced with its proposals.

Momoniat said the Treasury and Davis committee processes would run in parallel.

The Davis committee statement noted that although the carbon tax was not specifically listed in its terms of reference, its broader mandate had enough scope for it to review it.

It said the tax could play a role in achieving the transition to a low-carbon economy and in meeting SA's global commitment to reduce greenhouse gas emissions. Account had to be taken of "any possible negative economic and social impacts of the carbon tax over the short term and hence the need for a smooth and gradual transition toward a low carbon economy".

The committee will receive comments until May 8.

Source: Business Day