Following public consultation, the National Treasury has revised its concept design for a carbon tax with a draft policy paper due for publication and comment during 2012 and implementation planned for 2013/14.
In the Budget Review document issued alongside Wednesday's Budget, it said the proposed design includes: percentage-based rather than absolute emissions-based thresholds below which the tax would not be payable; a higher tax-free threshold for process emission with consideration given to the limitations of the cement, iron and steel, aluminium and glass sectors to mitigate emissions over the near term; additional relief for trade-exposed sectors; the use of offsets by companies to reduce their carbon tax liability; and phased implementation.
The tax will apply to carbon dioxide equivalent emissions calculated using agreed methods.
According to the Budget Review document, a basic tax-free threshold of 60% (with additional concessions for process emissions and for trade-exposed sectors) and maximum offset percentages of 5-10% until 2019/20 is proposed.
Significantly, a carbon tax rate of 120 rand per ton of carbon dioxide equivalent above the thresholds is proposed to take effect during 2013/14 with annual increases of 10% until 2019/20. Revenues from the tax will not be earmarked or ring-fenced, but consideration will be given to spending to address environmental concerns.
Meanwhile, the Budget Review document said that the electricity levy generated from non-renew3able source will be increased to 3.5 cents per kWh from 1c/kWh.
It said the additional revenue will be used to fund energy -efficient initiatives such as the solar water heating programme. It said the net impact on electricity tariffs should be neutral. - I-Net Bridge