Deputy finance minister Mondli Gungubele. Picture: ESA ALEXANDER
Deputy finance minister Mondli Gungubele. Picture: ESA ALEXANDER

The National Assembly adopted the Carbon Tax Bill on Tuesday, despite opposition from the DA. 

The bill will now be sent to the National Council of Provinces for concurrence. The tax is due to take effect from June 1.

Concluding the debate on the bill, deputy finance minister Mondli Gungubele said that unless SA tackles climate change it will not be able to reach its developmental objectives.

“Climate change poses the greatest threat to humankind and SA intends to play its role as part of the global effort to reduce greenhouse gas emissions and to meet its commitments under the Paris agreement,” Gungubele said.

In terms of these commitments, SA’s emissions are expected to peak between 2020 and 2025, plateau between 2025 and 2035, and decline thereafter.

Gungubele noted that the Carbon Tax Bill gives effect to the polluter-pays principle and will ensure that the cost of damage caused by greenhouse gases, such as carbon dioxide and methane, are included in the price of high carbon-emitting goods and services. These costs will have to be taken into account in production, consumption and investment decisions.

DA finance spokesperson Alf Lees said the economy was in a crisis with more than nine-million unemployed. “If we are to avoid  further stagnation in economic growth we simply cannot afford any further taxes.” What is needed is a decrease in taxes, not an increase in taxes to stimulate the economy, he said.

DA MP Gwen Ngwenya said that some have argued the carbon tax will be too low to be effective and that there are also serious doubts that such a tax is the most appropriate approach. It is  possible that the bill will  just be a lot of policy “hot air” that  will not reduce greenhouse gas emissions.

Ngwenya said there are alternative ways to mitigate greenhouse gas emissions such as the introduction of an emission trading system, which will limit economy-wide emissions and allow the market to set an appropriate price for carbon.

Under the bill’s tax regime, a number of tax-free allowances will apply during the first phase and will be capped at 95%. An initial headline tax rate of R120 per tonne carbon dioxide equivalent (CO2e) and various tax-free allowances will thus result in an effective tax rate that will vary between R6 and R48 per tonne of CO2e.

The process of preparing the bill dates back to 2010 when the carbon tax discussion paper was published. This was followed in 2013 by the carbon tax policy paper, the 2014 carbon offsets paper, the 2015 carbon tax bill and the 2016 draft regulation on carbon offsets.