National Treasury and SARS recently (September 2022) presented their draft response to public comments regarding proposals in the 2022 Draft Taxation Laws Amendment Bill (Draft TLAB).
One of the key proposals is a steep progressive increase in SA’s current carbon tax rate of R144 (about US$9):

by a minimum of US$1 per year in the 2023 to 2025 tax periods;
by a sizeable leap to US$20/tCO2e rand equivalent from 1 January 2026;
to US$30/tCO2e rand equivalent from 1 January 2030; and
to as much as $120/tonne by 2050 as provided for in the 2022 Budget.

Public comments indicated that stakeholders broadly support the carbon tax as a mechanism for mitigating local emissions and meeting SA’s Paris Agreement commitments.

Some commented that the proposed increases are well below expert recommendations, and raised concerns that a domestic carbon price below the international price could impact negatively on SA’s international competitiveness and the demand for local goods.

Others raised concerns that the carbon tax rate increases were too high and too soon, threatening the survival of affected businesses, while inhibiting investment in decarbonisation technologies and growth in new low-carbon sectors. It was suggested that the annual carbon tax rate be increased by inflation plus two percentage points until at least 2030 and that a higher carbon price is only considered after 2035.
Treasury rejected the proposal, noting that effective carbon tax rates can be lowered through tax-free allowances and other deductions, and that the sooner local companies transition, the more competitive they will be and the better positioned to avoid carbon border adjustments.

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