Monday, April 4, 2011

Carbon Tax discussion paper..comment

South Africa Travel Online fully supports the introduction of a carbon tax in a way that does not impact on South Africa's competitiveness, and applauds the government for progressing the discussion (see carbon tax discussion paper). We are in favour of large carbon taxes in exchange for equivalently large reductions in other taxes.

Countries implementing at different paces

Not all countries are going to implement carbon taxes to the same extent as South Africa. Whilst this should not hold us back, it's vital that Government implement carbon taxation in a smart way, to ensure that the relative competitiveness of South African companies is not worsened.

Tax competitiveness of SA companies

If there is a net increase in the tax paid by South Africa's companies and individuals relative to other countries, South Africa will be less attractive to both groups. South Africa's biggest problem is unemployment, and to reduce unemployment we need to make the country attractive to companies. Tax competitiveness of companies is vital to reducing unemployment.
To maintain competitiveness it's important that there isn't a net increase in taxes, this can be achieved by chanelling the additional tax revenue received back through appropriate reductions in other taxes charged to corporations and individuals. We are in favour of large carbon taxes in exchange for equivalent reductions in income taxes and corporate taxes.
Naturally, if the tax reductions are targetted towards industries with low carbon use, this would amplify the positive environmental impact of the additional taxes targeted towards high high carbon use, and we support this.

Carbon tax on imported items

In order to allow South African producers to compete against foreigners, a carbon tax should be imposed on imported items, which takes account of:
  • carbon emissions in shipping or flying the item to South Africa (locally produced goods are more carbon friendly). This could be based on a simple formula, like weight multiplied by a factor (even rough adjustments are better than none at all).
  • carbon emissions from producing the item (to the extent that the country of origin does not impose a carbon tax on goods). Once again a rough adjustment is better than none at all - a register should be maintained of the extent to which carbon taxes are imposed on goods by different countries, and the cost of the good ratioed up/down by that factor.
Without these measures, tough climate legislation merely results in carbon-intensive items being imported from jurisdictions which are more lax; whilst jurisdictions with tough climate legislation shift activities to those with low carbon impact.
Whilst the legal and practical difficulties as set out in the discussion paper are appreciated, this issue is important enough that we request our government to confront and resolve them.

South Africa's labour competitiveness

As mentioned earlier, unemployment is one South Africa's biggest issue. Another reason we support a carbon tax, is that it encourages a shift from mechanised processes to using labour.

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South Africa Travel Online

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