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South Africa introduces Carbon Tax

South Africa – Newly appointed President Cyril Ramaphosa has signed the Carbon Tax Act into law and it will come into effect from 1 June 2019.

The carbon tax, which aims to reduce harmful emissions by introducing the polluter-pays principle was first suggested in 2010 but has been postponed several times.

South Africa is regarded as one of the worst polluters on the continent and is in the process of lowering emission in efforts to meet agreements on global climate change. While this is a positive move toward sustainability, mining companies, steelmakers and the debt-ridden Eskom believe it will erode profit and push up the price of electricity.

“Climate change represents one of the biggest challenges facing humankind, and the primary objective of the carbon tax is to reduce greenhouse gas (GHG) emissions in a sustainable, cost effective, and affordable manner. Government has outlined its strong commitment to play its part in global efforts to mitigate GHG emissions as outlined in the National Climate Change Response Policy (NCCRP) of 2011 and the National Development Plan (NDP) of 2012,” a spokesperson for the National Treasury told the media.

The first phase of the tax is from 1 June 2019 to December 2022, with a tax rate of R120 per tonne of carbon dioxide equivalent.

Allowable tax breaks will reduce the effective rate to between R6 and R48 per tonne of CO2, National Treasury said.

“A review of the impact of the tax will be conducted before the second phase and will take into account the progress made to reduce GHG (greenhouse gas) emissions in line with our National Determined Contribution,” the treasury said.

The second phase will run from 2023 to 2030.

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