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Carbon tax, energy-efficiency savings and the electricity levy

Friday, 01 March 2013   (0 Comments)
Posted by: Erich Bell
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In the 2012/13 Budget, it was proposed, in line with the Climate Change Response White Paper approved by Cabinet in 2011, that carbon tax would be implemented in 2013/14 at a rate of R120 per ton of CO2 on direct emissions. This rate was to be increased at 10% per annum until 2019/20. The carbon emissions tax would be percentage-based rather than having emissions thresholds.

The 2013/14 Budget proposes implementation of carbon tax effective 1 January 2015 in accordance with the rates suggested in 2012/13, being R120 per ton of CO2 on direct emissions, increasing  at 10% per annum during the first implementation phase. During the first phase of implementation between 2015 and 2020, a basic tax-free percentage threshold of 60% is proposed as previously suggested. Off-set percentages of 5-10% aim to incentivise emission-intensive and trade-exposed industries to invest in and develop emission reducing projects outside of their ordinary operations, thus reducing their carbon tax liabilities.

We await the publication of an updated policy paper by the end of March 2013 for comment and consultation. It is further suggested that some of the revenues generated through the carbon tax will be used to fund energy-efficient savings tax incentives. The implementation of the carbon tax envisages the possibility that the electricity levy will gradually be phased-out.

Government has proposed an extension of the incentive related to the exemption of income from Clean Development Mechanism projects until 31 December 2020, in light of the second commitment period of the Kyoto Protocol.

Source: Danielle Botha, Associate, Tax, Cliffe Dekker Hofmeyr



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