**This story has been withdrawn due to inaccurate information published Feb. 8 by PwC. The consulting firm’s comments were based on an old version of South Africa’s carbon tax bill. The legislation was amended before the Standing Committee on Finance vote on Feb. 5, which finalised the bill ahead of a full parliamentary vote due in the coming months. Art. 16 was changed to set the date after which taxpayers must start paying the carbon tax at June 1, 2019 – the same day that the tax is set to become operational. Numerous sources including one at South Africa’s Treasury have confirmed to Carbon Pulse that PwC’s claim that this date still needs to be determined and gazetted, and that it is highly doubtful that any other date than Jan. 1 will be selected, were incorrect. PwC has not acknowledged or confirmed its error at the time of update. Carbon Pulse apologises for reporting this error and for any inconvenience caused.
South Africa’s long-awaited carbon tax may be delayed just a bit longer, a consulting firm has said.
While the bill underpinning the levy is slated to enter into force on June 1, 2019, the start of the first tax period may be pushed to early 2020, according to PwC.
“Clause 16 of the bill provides that the first tax period will commence on a date ‘determined by the Minister in the Gazette’. This means that only emissions from the date so determined will be subject to the tax … [and] this date is obviously not known at this stage,” it said in a note published Friday.
The legislation – which has been in the works for more nearly a decade – was adopted by South Africa’s parliamentary finance committee last week, setting it up for a vote by the full plenary in the coming months.
If approved by lawmakers, the bill would impose a 120 rand/tonne ($8.68) tax on emissions from most of the country’s stationary and non-stationary sources.
“Because the carbon tax bill will only become operational on June 1, 2019, this presumably means that the effective date may not be gazetted before then and that any rules or regulations thereunder may also not be finalised before then,” PwC said.
The consultants added that it was “highly doubtful” that any date other than Jan. 1 would be selected as the effective date “as this would create significant practical challenges to applying the legislation for a portion of the calendar year (particularly in measuring emissions for part of a year).”
And while theoretically this could mean the first CO2 tax period runs from Jan. 1, 2019, as indicated in the country’s 2018 budget, PwC said it seems “possible, if not probable,” that the effective date will be pushed out to Jan. 1, 2020.
“We expect clarity in this regard to be provided in the 2019 budget,” the note added.
South Africa’s Finance Minister Tito Mboweni is scheduled to deliver this year’s budget on Feb. 20.
It’s not clear when the full parliament will vote on the bill, but there are a number of plenary sessions scheduled during the four weeks starting Feb. 19.
The term of the current National Assembly officially ends on May 6, but experts expect lawmakers to wrap it up well before that as the country will hold its general elections later that month.
- South Africa’s national carbon tax was first floated in 2010, a year before the country hosted the annual UN climate talks. But progress has been slow, with the government only publishing the first draft in Nov. 2015.
- The tax will affect virtually all areas of South Africa’s economy, covering most stationary and non-stationary sources and applying to fossil fuel combustion, fugitive emissions, and industrial processes.
- Waste, agriculture, forestry, and other land-use sectors are exempt from paying it or performing MRV until 2022 due to the difficulty in accurately measuring emissions from those sources.
- A basic tax-free allowance of 60% is offered to all emitters, with an additional 10% for having process or fugitive emissions.
- Another variable allowance of up to 10% is available for trade-exposed sectors, with an additional 5% available for above-average performance relating to sectoral benchmarks.
- Each emitter has an offset usage limit of 5% or 10%, depending on their sector. Credits from projects certified under the CDM, Gold Standard, and Verified Carbon Standard (Verra) will be allowed providing they meet certain criteria.
- Beyond that, a further 5% can be applied by companies that have developed an annual carbon budget and report it to the government.
- That means all emitters will face an effective rate of R6-48/tonne based on the suite of exemptions available and the admissibility of offsets, with some companies able to reduce their tax burdens by as much as 95%.
By Mike Szabo – firstname.lastname@example.org