By Charlotte Mathews

The controversial carbon tax, which was due to be introduced next year, will be postponed for another year to allow for more consultation

THE controversial carbon tax, which was due to be introduced next year, will be postponed for another year to allow for more consultation, national treasury says.

Treasury has agreed with the department of environmental affairs that a package of measures, one of which would be the carbon tax, is needed to address climate change and reduce emissions.

In line with SA’s commitment at the Copenhagen summit to reduce its greenhouse gas emissions, treasury is planning to introduce a tax of R120/t on carbon dioxide emissions from January 2015.

It says 94% of those who responded to its proposals supported the policy and more than half were in favour of a carbon tax, with some suggesting improvements to its effectiveness and to minimise negative economic consequences. Treasury proposes making some adjustments, including reducing Eskom’s tax liability, which would limit the potential effect on electricity prices; lowering the current electricity levy; addressing concerns about international competitiveness; and using carbon offsets to reduce companies’ tax liability.

Duane Newman, a director of Cova Advisory & Associates, had flagged an expected one-year delay in introducing carbon tax.

“If the tax is implemented in 2016, the expected tax collections could be in the region of R15bn-R20bn, which would be more than double the current environmental taxes collected,” he says, but adds it has not yet been budgeted for. Current environmental taxes include the plastic bag, air passenger and electricity levies.

Newman says business should be aware there are incentives and grants on offer to offset carbon taxes, including tax allowances on energy saved and grants from the department of trade & industry on green technology improvements.

Treasury says a biofuels production incentive, announced last year, will take effect in the second half of 2015 as part of the fuel levy. The amount will be decided once the cost structure and the point of blending are known.

Treasury has also mentioned an environmental levy, or something similar, to address the costs of acid mine drainage, but says all interested parties will be consulted first.