Majority vote in Parliament in favour of the Carbon Tax Bill

On 19th February 2019, a clear majority voted in the South African National Assembly for the long-debated Carbon Tax Bill. Following this milestone, the bill will be submitted to the Council of Provinces before SA President Cyril Ramaphosa can sign it into law. No significant challenges are expected to arise in the Council. The clearing of this major legislative hurdle means that the time has really come for companies to start preparing for the Carbon Tax, which is now all but certain to become operational and effective in little over three months’ time on 1 June 2019. The tax allows companies to manage their exposure through a number of allowances of up to 95 percent, including a carbon offset allowance which can reduce an entity’s tax exposure up to 5 or 10 percent.

Carbon market modelling by EcoMetrix Africa shows that there is likely to be a considerable under-supply in the short to medium term of carbon credits that would be eligible to be used as offsets under the Carbon Tax. This could possibly lead to a revival of South Africa’s carbon market, which had hit a slump in 2012, just when offset projects were gaining traction.

Click here to download a copy of the Carbon Tax Bill.