Business is fuming following
the Treasury’s recent
announcement that it is
on track to implement the
proposed carbon tax next
year, saying that the timing
is off and that foreign direct
investment flow will be
negatively affected.
“The main question
around this is, what is the tax
for – to lower the country’s
carbon footprint or to raise
money for treasury? If it
is the former, there are
other ways to ensure
compliance. If the
latter, why doesn’t
government
simply raise
the fuel levy
rather than add
another costly
administrative
burden in the form
of another tax?”
asked director and chief
economist of Efficient Group,
Dawie Roodt.
Carol O`Brien, executive
director at the American
Chamber of Commerce, also
raised the administrative
costs of the proposed carbon
tax as a concern. “The experts
on the carbon tax say the
system for the government
to administer and for carbon
credits to be traded is not yet
fully developed.
“It is difficult to propose a
tax where the administrative
mechanisms aren’t fully
understood,” she said, adding
that the implementation
was premature as there was
no global carbon price and
very few other countries –
including SA’s main trading
partners – had implemented a
carbon tax.
O’Brien commented that
the timing was off in
other ways as well.
“South Africa
is in a very
difficult
position
with a
major
revenue shortfall and an
economy that isn’t growing.
The country needs to find
ways to grow the tax base
by attracting new industries
and investments rather than
broadening the current tax
base,” she said.
Yet another tax burden
would, according to her,
further impact foreign
direct investment (FDI) as
the carbon tax needs to be
built into new business cases
and compared to the cost
of doing business in other
competing countries. “SA
is becoming less attractive
and this will reflect when
initial assessments of FDI
destination countries are
done by investors. Some
pundits already question
whether SA is the gateway
to Africa as we are seeing
companies going directly
to the countries in Africa
they want to invest in,” said
O’Brien.
Energy and chemicals
company, Sasol – which
would be majorly impacted
by a carbon tax – supports
Judge Dennis Davis’s
announcement that the Davis
Tax Committee is reviewing
the carbon tax proposals,
which offers opponents to
the tax the opportunity to air
their views. The committee
will receive comments up
until May 8 this year.
A Treasury statement noted
that it would be releasing a
draft bill “within the next two
months” for public comment.
“While we will provide
comment on the draft carbon
tax bill during the public
consultation process, it
remains our position that
the implementation of a
carbon tax as proposed is
not the appropriate policy
for South Africa, as it will
have a negative impact on the
country’s competitiveness and
lead to further increases in
electricity prices,” said Sasol
spokesperson, Elton Fortuin,
in an e-mail to FTW.
He added that in Sasol’s
view South Africa needed
appropriate incentives to
invest in new, more energyefficient
processes and
projects.
INSERT & CAPTION
SA needs to find
ways to grow the tax
base by attracting
new industries and
investments.
– Carol ‘O Brien
