The introduction of the proposed carbon tax could see the economy end up 1%-3% smaller in 2035 than it would have been without the tax, with exports from sectors such as iron and steel hit particularly hard. But the tax could boost exports from sectors such as footwear and machinery and is expected to cut SA’s greenhouse gas emissions by 26%-33% by 2035. It would go a long way towards meeting SA’s commitment to cut emissions by 42%, according to a report from the Treasury, which has conducted an economy-wide modelling exercise to estimate the effect of the carbon tax. The controversial tax, which the Treasury had hoped to implement from the beginning of 2017, is now likely to be implemented at the end of 2017 or early in 2018. Finance Minister Pravin Gordhan said in his medium-term budget policy statement in October the legislation on the new tax would now be processed by Parliament in 2017 because there had been no time to process it in 2016 as planned.
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