Carbon Tax Discussion Paper For Public Comment : Phase Two of the Carbon Tax

The “Phase Two of the Carbon Tax” discussion paper by the National Treasury outlines proposed updates to South Africa’s carbon tax system, scheduled to take effect from January 1, 2026. As South Africa, a top global emitter due to its reliance on fossil fuels, aims to achieve a net-zero carbon economy by 2050, these proposals are designed to help meet its commitments under the Paris Agreement. Key changes include gradually increasing the carbon tax rate, adjusting tax-free allowances, and enhancing incentives for carbon offsets, which together aim to curb emissions while ensuring economic resilience.

The paper invites public comments on these proposals, with a deadline set for December 13, 2024. Stakeholder feedback will be essential to refining policies, particularly around updated allowances, phased tax increases, and revenue recycling measures to support renewable energy and green hydrogen initiatives. This structured approach seeks to balance environmental goals with economic stability, offering businesses clarity on future carbon tax expectations while supporting South Africa’s low-carbon transition.

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