On November 10, South Africa’s National Treasury published a carbon tax modelling report, looking at the proposed levy’s impact on greenhouse gas (GHG) emissions and economic growth.
The tax, as outlined in the National Treasury’s 2013 Carbon Tax Policy Paper, would have an initial carbon tax rate of ZAR120 (USD8.48) per ton of CO2. The effective tax rate over the first phase of the carbon tax – from the eventual implementation date up to 2020 – is expected to vary between ZAR6 and ZAR48 per ton of CO2, taking into account certain tax-free thresholds and allowances.
The aims of the carbon tax are “to contribute to a meaningful and permanent reduction in GHG emissions whilst, at the same time, to minimize any potential adverse impacts on low income households and industrial competitiveness.” The modeling results confirmed that these aims could be achievable.
The results suggested that the carbon tax will have a significant impact on reducing South Africa’s GHG emissions by between 13 percent and 14.5 percent by 2025, and 26 percent to 33 per cent by 2035, compared with a business-as-usual scenario.
The carbon tax is expected to lead to a reduction in the annual average growth rate of the economy of just 0.05 percent to 0.15 percentage points compared with business-as-usual.
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