Emissions tax under fire

CO2 levy to be added to selling price of vehicles from 1 September

South Africa’s Retail Motor Industry (RMI) has voiced its opposition to government’s announcement that a carbon-emission tax is to be levied on passenger cars and will be charged as a flat rate as part of the selling price. According to reports, National Treasury spokesman Jabulani Sikhakhane has stated that government’s intention is to apply the tax to all passenger vehicles, including double-cab pickups (traditionally classified as commercial vehicles). Allegedly the tax, estimated to be in the region of R450-million for the 2010/11 financial year, will be collected from motor manufacturers and importers (R75 per g/km for each g/km above 120g/km). Chief Operating Officer of RMI, Jeff Osborne, said that this could ‘add R1 500 to the price of a small runabout and as much as R20 000 to the price of a big-engined SUV’. ‘What government has failed to consider is that CO2 is emitted only when vehicles are operational.

Unfair system
‘Hence the owner of a small sedan who drives only 10 000km a year pays the same amount of tax as an owner who travels 100 000km. In RMI’s view, that is unfair.’ Osborne suggests an alternate solution - the incorporation of the levy as part of the fuel price. In this way ‘the more the vehicle is used, the more CO2 it emits and, accordingly, the more tax will be paid’. If the aim of the emissions tax is to influence the composition of South Africa’s vehicle fleet so that it becomes more energy efficient, he says that government should look at making clean fuels available as soon as possible so that the latest technology, low-emissions engines can be introduced into South Africa. ‘Rather than penalising buyers of new vehicles through the imposition of the CO2 tax, government should look to introduce incentives in the new car market to promote the sale of models equipped with low-emission engines - and make available, on a tax exemption basis, the fuel on which they depend,’ he concludes.