Carbon tax must be explained to laymen

How can South Africa be 1% of the world economy and the 11th-biggest polluter? But there is hope.

KPMG reports that we are the 13th most active country in attempts to reduce carbon emissions.

The only way to force everyone to do their bit is to put a price on carbon emissions. So the introduction of a carbon emission tax on January 1 2015 is an easy sell. Much effort has gone into the Treasury’s policy paper on the tax, which was released on May 2.

But you have to swallow stimulants to get through all 92 pages. There will be few honourable MPs who will get past the 114 listed acronyms to get to page five.

Fair enough, the tax is highly technical. The mind boggles at the definition of a carbon emission ton. And few will be caught up in the administration of the tax. About half will be collected from Eskom and passed on as a cost to the consumer.

But it is a tax that we want everyone to legally avoid by reducing emissions. The aim is to “punish polluters in the interest of planet”. So all South Africans, registered taxpayers or not, should have a basic idea of how the tax affects them.

I have helped smokers quit with the line: “You smoke 11 out of 20 in a pack for the South African Revenue Service.” And drinkers respond to: “Sixteen tots out of 30 in a bottle are drunk for the love of your country.”

We have to be able to demonstrate the carbon tax component of a litre of petrol, kilowatt of electricity et cetera. Otherwise the tax will just become a stealth tax on the consumer.

Dear Pravin Gordhan, let’s leave the policy paper for the nerds to debate. But, please, can we have a short layman’s interpretation of the proposals? How will it affect the price of fuel and electricity in the five-year implementation period? How much will the government collect and from whom? And how much of the tax will be spent on cleaning up the planet versus how much will be added to the general pool of funds spent on people?

If we cannot understand the bottom-line effect, we may as well price carbon tax into the fuel and electricity levies. At least consumers then know where they stand.

Originally published in the Sunday Times: Money & Careers Tax Talk column.

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