South Africa’s Retail Motor Industry organisation has reacted strongly to Government’s statement that CO2 tax, scheduled to be levied on passenger cars from September 1, will be charged as a flat rate as part of the selling price of vehicles.
In news reports, National Treasury spokesman Jabulani Sikhakhane has been quoted as saying that Government intends the tax to be applied to all passenger cars – including double cab pick-ups, which traditionally have been classified as commercial vehicles.
Sikhakhane says Government thinking is that the tax will be included in the selling price of new vehicles, and will be collected from motor manufacturers and importers. He estimates that the tax will return about R450 million in the 2010/11 financial year.
In response, the CEO of the RMI, Jeff Osborne, describes Government’s collection plan as ill conceived, discriminating against buyers who, for various reasons – including the desire for a cleaner environment – use their vehicles less.
“As matters stand, buyers of new vehicles will pay a flat rate in CO2 tax, calculated at R75 a g/km for each g/km emitted above 120 g/km. That could add R1 500 to the price of a small runabout, and as much as R20 000 to the price of a big-engined SUV.
“What Government has failed to consider is that CO2 is emitted only when vehicles are operational. Hence the owner of a small sedan who drives only 10 000km a year pays the same amount of tax as an owner who travels 100 000km. In the RMI’s view, that is unfair.”
Osborne suggests a solution can be found by incorporating a CO2 levy as part of the fuel price, so that all CO2 polluters are taxed according to vehicle usage. “The more the vehicle is used, the more CO2 it emits and, accordingly, the more tax is paid.”
He says if the aim of emissions tax is to influence the composition of South Africa’s vehicle fleet so that it becomes more energy-efficient and environmentally friendly, Government will do well to look at making available clean fuels as quickly as possible so that latest technology, low emission engines can be introduced to South Africa.
“Rather than penalising buyers of new vehicles through the imposition of CO2 tax, Government should look to introduce incentives in the new car market to promote the sale of models equipped with low-emission engines – and make available on a tax exemption basis the fuel on which they depend.”
According to international research, in 2007 South Africa was ranked 18th in the world for CO2 emissions derived from fuel combustion.
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