Friday, July 30, 2010

Is the carbon tax route taken worth it?

This is for all those who are thinking of buying a new car using their bonuses this December.

Come September and you will start paying some extra monies for any new car you buy. Why you ask? Our government is introducing a carbon Tax....this is done to discourage you from driving a not necessarily, but to discourage you buying vehicles that omits more dirt on our beautiful skies and atmosphere. Basically, the tax will be based on the new vehicle's certified CO2 emission at R75 per g/Km for each g/km above 120 g/km. This emissions tax will be in addition to the current ad valorem luxury tax on new vehicles. According to experts,
with the addition of 14 percent VAT, the tax rate will increase to R85.50 per gram per kilometre.

This means vehicles such as Toyota Prius which are less polluting will cost lesser than say an Isizu KB bakkie. But remember, this are only for new cars only which have left a lot of car sellers asking why don't the government instead encourages the scrapping of old cars which are "by world standards, ageing and getting older by the year".

Besides Lloyd's concerns other concerns which have been raised are;
  • Automakers are incensed that the tax will apply to bakkies, claiming it will make South Africa the first country in the world to do this. The reason is that clearly defined standard to measure CO2 emissions by bakkies did not exist.
  • National Association of Automobile Manufacturers of South Africa (Naamsa) though it accepts in principle, argues that the tax will push vehicle prices up by about 2%, and that this additional tax burden amounts to about R1,2-billion a year, based on 2010 projected new car sales (The national treasury estimates the tax will net R450-million in the financial year 2010/11)
  • Absent of legislation and incentivising of the introduction of Euro IV enabling 'green' fuel in South Africa;
  • Fears in the Eastern Cape motoring industry that the move could threaten jobs, cripple future sales growth and plunge the industry straight back into a financial crisis - The government's response was that this did not contradict its second industrial policy action plan;
  • Concerns that the tax may not be used to promote green technology but to serve as another means of revenue source.
Whether the carbon tax route taken is worth it or not, one thing remains.....Best carbon tax must target emissions cuts, ‘not raising revenue’

Picture Source: Here

No comments: