What the Treasury’s models show about a carbon tax and the economy
A tax will contribute significantly to SA’s greenhouse gas emissions reduction goals with only a modest negative effect on the economy, writes Cecil Modern
The National Treasury has published a carbon tax modelling report, assessing the effects of the proposed carbon tax policy on reducing greenhouse gases emissions, as well as on economic growth, employment, and the competitiveness of various industries. The study was conducted on behalf of the Treasury under the Partnership for Market Readiness initiative administered by the World Bank, aimed at supporting countries in strengthening their policy analysis and technical capacity to implement carbon pricing measures. It closely models the design of the tax as outlined in the 2013 Carbon Tax Policy Paper, aimed at cutting greenhouse gas emissions while minimising adverse effects on poorer households and industrial competitiveness. The provision of tax-free emissions thresholds and allowances of 60%-95% will result in a relatively modest carbon tax rate, of R6-R48 a ton of carbon dioxide equivalent, during the first phase of the tax to end-2020. A variety of tax policy and revenue recycli...
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