Increasingly, governments and businesses recognise that the world faces a climate crisis, and acknowledge the need for partnerships to limit global warming to below 1.5 degrees Celsius. As the Paris Agreement becomes operational in 2020, signatories will submit revised nationally determined contribution commitments to mitigate climate change. A range of legislation and policies are being developed to meet South Africa’s commitments in this regard.

South Africa introduced a carbon tax in June 2019 as part of government’s broader climate change mitigation policy. Government is preparing to publish an environmental fiscal reform review paper. It will explore the potential for new environmental taxes and reforms to existing instruments, such as:

  • Restructuring the general fuel levy to include a local air pollution emissions component.
  • Alleviating traffic congestion through road pricing charges and design options for an annual carbon dioxide tax on vehicles, in collaboration with the Department of Transport and provincial governments.
  • Reviewing inefficient fossil fuel subsidies, including the VAT zero-rating of transport fuels.
  • Considering product taxes on electrical and electronic waste.
  • Reviewing the tax treatment of company cars to incentivise use of more fuel-efficient vehicles.

We will keep you posted on any developments in this regard.