Excerpt from a media statement from National Treasury on the publication of the 2019 Carbon Tax Act:
"The Carbon Tax Act gives effect to the polluter-pays-principle for large emitters and helps to ensure that firms and consumers take the negative adverse costs (externalities) into account in their future production, consumption and investment decisions. Firms are incentivized towards adopting cleaner technologies over the next decade and beyond.
The carbon tax will initially only apply to scope 1 emitters in the first phase. The first phase will be from 1 June 2019 to 31 December 2022, and the second phase from 2023 to 2030.
The design of the carbon tax also provides significant tax-free emission allowances ranging from 60 per cent to 95 per cent in this first phase. This includes a basic tax-free allowance of 60 per cent for all activities, a 10 per cent process and fugitive emissions allowance, a maximum 10 per cent allowance for companies that use carbon offsets to reduce their tax liability, a performance allowance of up to 5 per cent for companies that reduce the emissions intensity of their activities, a 5 per cent carbon budget allowance for complying with the reporting requirements and a maximum 10 per cent allowance for trade exposed sectors.
The introduction of the carbon tax will also not have any impact on the price of electricity for the first phase.This will result in a relatively modest carbon tax rate ranging from R6 to R48 per tonneof CO2equivalent emitted, which is a relatively low tax rate to further provide current significant emitters time to transition their operations to cleaner technologies throughinvestments in energy efficiency, renewables and other low carbon measures"