South Africa’s sustainability will come at a high cost to its trucking industry – and ultimately consumers. This was the consensus of several industry experts in the wake of the implementation on June 1 of the new Carbon Tax Act. Central to the legislation is the introduction of a carbon pricing mechanism which takes the form of a tax at the rate of R120 per tonne of carbon dioxide equivalent of greenhouse gas emissions, which will be increased by the amount of the consumer price inflation plus 2% per year until December 31, 2022.
“It is simply just another cost being added to the trucking industry,” said economist Mike Schussler. According to a spokesman for the Automobile Association, combined with the expected fuel price increase diesel prices could go up in total by 24c/l in June. “Petrol prices will drop by about 10c/l while the basic diesel price increase is expected to be about 14c/l,” he said. “But the carbon tax adds 9c/l to petrol, and 10c/l to the diesel price. In effect, this means that petrol will decrease by only 1c/l, while diesel will increase more
significantly by around 24c/l.” According to Schüssler the new tax is making it more expensive to do business in South Africa. The Treasury, however, said the tax would play a role in achieving the objectives set out in the National Climate Change Response Policy of 2011 and contribute to meeting South Africa’s commitments to reduce greenhouse gases as agreed under the 2015 Paris Climate Agreement. According to Gavin Kelly, acting CEO of the Road Freight Association, whilst the tax was less than what was initially expected, it would impact on the cost of road freight logistics. Kelly said one of the major concerns with the tax was that there was no real incentive to transport operators to drive cleaner
vehicles. “It does not matter if a transporter is purchasing Euro 5 vehicles and doing all they can to reduce emissions as the tax is paid regardless of how efficient the fleet is. A second concern is where is the tax money going? Is it just going into the deep dark pit called revenue or into projects and technologies to reduce the country’s emissions?” Treasury maintains that firms are incentivised to adopt cleaner
technologies over the next decade and beyond through its energy-efficiency savings tax incentive that allows businesses to claim deductions for energy efficiency savings at a rate of 95c/kWh. Whilst this expires at the end of this year plans are believed to be in place to extend it.
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It is simply just another cost being added to the trucking industry. – Mike Schussler
