South Africa gears up for carbon tax

20:56, August 16, 2010      

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South Africa's National Treasury has announced that the new "green" tax will also be levied on new light commercial vehicles – double cabs (4×4) and small bakkies.

"Commercial vehicles (trucks) will not be subject to the CO2 vehicle emissions tax for now", National Treasury spokesperson Jabulani Sikhakhane said on Sunday.

"However, small bakkies – especially double cabs – will be subject to the CO2 tax as from September 1. This is in line with the VAT Act that recognizes that these type of light commercial vehicles are very often used as passenger vehicles". he said.

Earlier this year, South African Finance Minister Pravin Gordhan announced in his maiden budget speech that a new carbon emissions tax will be introduced in the country starting on September 1.

In his 2010 Budget Review, he stated that only new passenger vehicles will be taxed, based on their certified carbon dioxide (CO2) emissions at 75 rands (10,26 U.S. dollars) a g/km for each g/ km above 120 g/km.

The new tax is part of the South African government's efforts to limit greenhouse gas emissions in the country so that South Africa can become more energy-efficient and environmentally friendly.

"The revenue collected will be used to fund general government priorities, including various environmental objectives", said Sikhakhane.

"The Environmental Fiscal Reform Policy paper published in 2006 makes clear government's intention to introduce environmental taxes – and incentives – to ensure that our economic growth is directed towards a more sustainable path", he said.

In February, the finance minister referred to the tax being subject to only new passenger cars in his 2010 budget review because the motor industry had requested that the tax be limited to passenger vehicles since there was no data on CO2 emissions by light commercial vehicles.

But under the perception that double cabs and small bakkies were often used as passenger vehicles in South Africa, the National Treasury later decided to classify them as passenger vehicles.

In turn, the motor industry has strongly objected to double cabs and small bakkies being classified as passenger vehicles in the new vehicle "green" tax net.

"The decision by National Treasury to extend the CO2 new vehicle tax regime, to light commercial vehicles not just new passenger alarming and will result to negative and potentially serious consequences for the South African vehicle manufacturing, importing and distribution sectors as well as associated industries", said David Powels, president of National Association of Automobile Manufacturers of South Africa (Naamsa), on Sunday.



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