Skint Treasury focuses on carbon tax

During last week’s budget speech, a prominent tax nerd tweeted that it was the dullest in 20 years. Rubbish. Its implications will be with us for years.

Budget 2013-14 tells us the Treasury has accepted that two of the big three – personal tax and company tax – are maxed out. Increasing corporate and personal tax rates will not help much if there are simply not enough taxpayers.

And then comes VAT, against which Cosatu has drawn a line in the sand, so 14% stays. This means that more than 80% of the tax base cannot grow much faster than growth and inflation rates combined.

Despite the potentially inflationary effects of a carbon emissions’ tax, it is slated for implementation on January 1 2014, applying a base of R120 a ton.

The greens say the carbon tax should be spent in the interests of a clean environment. Yes, some of it will be, but the bulk of the money will be invested in people, not the planet.

The Treasury’s next paper on the green tax is due this month. And then there will be a protracted parliamentary process prior to implementation.

In the last few days, we have seen brave calls from the government to contain Eskom’s increase to 8% and the moderation of the fuel levy increase to 22.5c a litre (including the Road Accident Fund levy). Far higher charges on both could easily have been justified – and it is a shame that the government’s concessions have received little acknowledgement from business.

The inevitable consequence of the lower fuel levy increase is that the government will persist with e-tolling.

This will lead to unhappiness, because the opposition refuses to distinguish between national fuel taxes and road-usage charges.

We need an “energy risk committee” to, first, monitor increased energy prices, especially under the threat of a weakening rand and, second, to evaluate the effect of carbon taxes.

Instead of whingeing about Eskom, businesses need to accept that we face an energy crisis. We have to get on with energy-reduction programmes.

Today, the cycling community will be pedalling through Cape Town in the Cape Argus race.

We should be asking: “Is flying or driving thousands of kilometres to bike 100km sustainable or environmentally friendly?”

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

Showing 1 Comment »

  1. I really concur to say that this year budget is the best ever as is cautious to all components of both the goods and money market. Only through huge tax base .SA can be able to overcome its problem of deficit. Come carbon tax you are the only solution to deficit, not only the rich will be paying for the destitute but motorist will be contributing a bigger chunk to SARS. Godfrey at Ufs main campus.

    Comment by Sipho — 17 March 2013 @ 7:02 pm

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