Yesterday Finance Minister Pravin Gordhan announced that South Africa will introduce a carbon tax on 1 January 2015. The introduction of the carbon tax is in line with South Africa's approach to adopt a low-carbon economy, which includes mobilisation of its renewable energy potential, as outlined in the National Development Plan. South Africa is one of the biggest carbon dioxide emitters in the world, although its emissions are much less than compared to the emissions of the USA, EU and some of our fellow BRICS members.

It was proposed that carbon should be taxed at a rate of R120 per ton of CO2 equivalent. It was further proposed that any adverse impact may be softened by introducing a tax-free exemption threshold of 60 per cent, with some additional allowances for emission intensive and trade-exposed industries.

However, the proposed tax rate and possible exemptions are mere proposals and as such business needs to keep an eye out for further developments and engage government hereon. Minister Gordhan did indicate that an updated carbon tax policy paper will be published for further consideration by the end of March 2013.

Rian Geldenhuys
© Trade Law Chambers 2013