LegalBrief commenting on a MoneyWeb interview, 25 May, 2016.
Energy auditor Adam Simcock says next year’s carbon tax will result in the development of a new industry that will see technology transfer and new jobs created to make up for the expected increase in unemployment caused by the higher tax burden. He says that, because large companies will be forced to invest in energy-saving and lower carbon-emitting technologies, a carbon sub-sector will develop, while energy entrepreneurs will find creative ways earn carbon credits from the government and sell them to carbon emitting businesses, who will in turn be liable for less tax.
“It will create inward investment and technology creation, because that’s what it does everywhere else in the world. Because you import solar panels and inverters, and you employ staff to train employees to install them and monitor them,” says Simcock who also provides guidance on the looming tax.
According to this Moneyweb article, revenue from the tax would also boost the economy if it was invested in green energy projects.
Meanwhile, treasury has stated that the carbon tax will not hurt the economy because there will be a five-year grace period wherein Eskom will be exempt, giving energy-intensive industries like mining and manufacturing relief during that period. It also said there will be tax-free exemptions ranging from between 60% and 95% of total emissions, implying that imposed tax will only be 5% to 40% of actual emissions during this period.
Taking this into account, the effective tax rate will range between R6 and R48 per tonne of CO2e (carbon dioxide equivalent), as opposed to the R120 per tonne that is quoted in the draft bill.