Implications of new CO2 emissions tax spelt out

Most of us are probably aware of the recently introduced CO2 vehicle emission tax. However, some may not be aware of the actual cost implications on the purchase of a new motor vehicle. It is important first of all to highlight the fact that the tax (or environmental levy) is only applicable to passenger motor vehicles (excluding double cabs and minibus taxis). According to National Treasury, the tax on double cabs will be applied from March 1, 2011 and that on minibus taxis at a future date not yet decided. The tax rate is R75 per g/km CO2 emissions exceeding 120 g/km. Where an acceptable test report indicating the CO2 emissions on the vehicle is not obtained, the CO2 emissions must be calculated according to the methods provided for under Schedule No. 1 Part 3D to the Customs and Excise Act 91 of 1964 (“the Act”). For practical purposes, let’s examine the effect on two different categories of passenger vehicles which have been tested for CO2 emissions. The first example is that of a popular brand 1.4 litre, manual, 4-door sedan. The vehicle has CO2 emissions of 159 g/km i.e. 39 g/km above the threshold of 120 g/km. Therefore the tax payable would be 39 x R75 = R2 925.00. Our second example is that of a popular luxury 1.8 litre, manual 4-door sedan. This vehicle has CO2 emissions of 183 g/km i.e. 63 g/km above the threshold. Therefore the tax payable would be 63 x R75 = R4 725.00. The intention of this tax is to encourage the purchase of vehicles with lower CO2 emissions. Only the passage of time will tell whether this tax will have the desired effect. Otherwise there is the possibility that we may face regulatory interventions in the future. Information courtesy of National Treasury and www.whatgreencar.com.