‘Carbon tax will be used where needed’

Revenue generated from a carbon tax will not necessarily be used for environmental projects, says Sharlin Hemraj, environmental and fuel taxes director in the National Treasury. “In the discussion paper on a carbon tax it is clearly indicated that National Treasury does not support strict earmarking,” she said. “But we are looking into directing funds through different departments and then considering those projects on merit. Full earmarking of revenues is not in line with Treasury policy, but it is recognised that funding can be channelled for specific programmes that contribute to reducing emissions. She said that a tax on carbon emissions that can be measured and verified was being favoured and initial indications were that a tax of “R75 (10 US$) per ton CO2 and increasing to around R200 (30 US$) per ton CO2 pt (at 2003 prices) would be both feasible and appropriate to achieve the desired behavioural changes and emission reduction targets”. Hemraj said it was a common misconception that the revenue generated from a specific tax – in this case a carbon tax – would be used to finance specific activities in the related industry. “Treasury differs from this position in that we have a range of priorities for South Africa that have to be achieved – from education to reducing the level of poverty.” Hemraj said Treasury spent money depending on where it was needed. South Africa, which is hosting the 17th Conference of the Parties of the United Nations Framework Convention on Climate Change or COP17 in Durban in November, is expected to present its work thus far while not necessarily having a complete strategy in place.