prospects of vehicle emissions tax reducing co 2 emissions in south africa
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Prospects of vehicle emissions tax reducing CO 2 emissions in South Africa. Introduction - South Africa's automotive industry. Accounts for about 10% of South Africa's manufacturing exports - crucial cog in the economy Contributes about 7.5% to South Africa's gross domestic product (GDP) - PowerPoint PPT PresentationTRANSCRIPT
Rudie NelStellenbosch University South [email protected]
Gerhard NienaberUniversity of Pretoria
South [email protected]
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Accounts for about 10% of South Africa's manufacturing exports - crucial cog in the economy
Contributes about 7.5% to South Africa's gross domestic product (GDP)
Provides employment to about 36 000 people
Separate tax effective from 1 September 2010 levied on new vehicles per gram per kilometre of CO2 emissions exceeding 120g/km (SARS 2010:192)
USD$ 10,56 per gram exceeding 120g/km
Average tax rate of between 2,3% - 3,6% expected (SARS 2010:192)
Purpose = attempt to reduce CO2 emissions by influencing consumer purchasing decisions (encouraging purchase of lower CO2-emitting vehicles)
Prospects of achieving its purpose in South Africa could be affected by the following factors (Nel 2009:4):
The design of the vehicle emissions tax Effective in reducing CO2 emissions?
Risk of unilateral implementation? Could affect competitiveness
Legislation Influence fiscal policy and planning as well as the effectiveness
of the tax base or the instruments used
Consumer attitudes Fiscal policy should not only target consumers
A model system for the assessment of the effects of vehicle and fuel emissions tax on CO2 emissions (Hayashi, Kato & Val 2001)
Categorised into three stages: Purchase tax Ownership tax Usage tax
Levying taxes in certain stages might be more effective in reducing CO2 emissions than in other stages
Stage Description
Purchase tax Once-off at acquisition
For example:Sales taxes and registration fees
Ownership tax Recurrent over period owned (not directly linked to usage).
For example:Annual licensing fees
Usage tax Recurrent and direclty linked to usage
For example:Fuel levies
Stage Description
Purchase tax Once-off at acquisition
For example:Sales taxes and registration fees
Ownership tax Recurrent over period owned (not directly linked to usage)
For example:Annual licensing fees
Usage tax Recurrent and direclty linked to usage
For example:Fuel levies
Stage Description
Purchase tax Once-off at acquisition.
For example:Sales taxes and registration fees
Ownership tax Recurrent over period owned (not directly linked to usage)
For example:Annual licensing fees
Usage tax Recurrent and direclty linked to usage
For example:Fuel levies
Stage Effect on reducing CO2 emissions
Purchase tax Not particularly effective in reducing CO2 emissions by influencing the decisions by consumers(Hayashi et al. 2001:135-138).
Ownership tax Minimal effect set in proportion to fuel efficiency / CO2 emissions.
Technology aimed at reducing CO2 emissions is important (Hayashi et al. 2001:138).
Usage tax Highest possible reduction in CO2 emissions. Most of the reduction as result of decrease in driving distance (Hayashi et al. 2001:135).
Stage Effect on reducing CO2 emissions
Purchase tax Not particularly effective in reducing CO2 emissions by influencing the decisions by consumers(Hayashi et al. 2001:135-138).
Ownership tax Minimal effect set in proportion to fuel efficiency / CO2 emissions.
Technology aimed at reducing CO2 emissions is important (Hayashi et al. 2001:138).
Usage tax Highest possible reduction in CO2 emissions. Most of the reduction as result of decrease in driving distance (Hayashi et al. 2001:135).
Stage Effect on reducing CO2 emissions
Purchase tax Not particularly effective in reducing CO2 emissions by influencing the decisions by consumers(Hayashi et al. 2001:135-138).
Ownership tax Minimal effect set in proportion to fuel efficiency / CO2 emissions.
Technology aimed at reducing CO2 emissions is important (Hayashi et al. 2001:138).
Usage tax Highest possible reduction in CO2 emissions. Most of the reduction as result of decrease in driving distance (Hayashi et al. 2001:135).
Stage Effect on reducing CO2 emissions
Purchase tax Not particularly effective in reducing CO2 emissions by influencing the decisions by consumers(Hayashi et al. 2001:135-138).
Ownership tax Minimal effect set in proportion to fuel efficiency / CO2 emissions.
Technology aimed at reducing CO2 emissions is important (Hayashi et al. 2001:138).
Usage tax Highest possible reduction in CO2 emissions. Most of the reduction as result of decrease in driving distance (Hayashi et al. 2001:135).
Stage South African taxes/levies
Assessment base
Purchase tax Value Added TaxRegistration feesCustoms and exciseVehicle emissions tax
Selling priceTare weightSelling priceCO2 emissions
Ownership tax
Annual licensing fees
excluding avoidable taxes/levies such as toll fees and parking
Tare weight
Usage tax Transport fuel levies: -General fuel levy-Road Accident Fund levy-Customs and excise levy
Not CO2
emissions
Stage South African taxes/levies
Assessment base
Purchase tax Value Added TaxRegistration feesCustoms and exciseVehicle emissions tax
Selling priceTare weightSelling priceCO2 emissions
Ownership tax
Annual licensing fees
excluding avoidable taxes/levies such as toll fees and parking
Tare weight
Usage tax Transport fuel levies: -General fuel levy-Road Accident Fund levy-Customs and excise levy
Not CO2
emissions
Stage South African taxes/levies
Assessment base
Purchase tax Value Added TaxRegistration feesCustoms and exciseVehicle emissions tax
Selling priceTare weightSelling priceCO2 emissions
Ownership tax
Annual licensing fees
excluding avoidable taxes/levies such as toll fees and parking
Tare weight
Usage tax Transport fuel levies: -General fuel levy-Road Accident Fund levy-Customs and excise levy
Not CO2
emissions
Stage South African taxes/levies
Assessment base
Purchase tax Value Added TaxRegistration feesCustoms and exciseVehicle emissions tax
Selling priceTare weightSelling priceCO2 emissions
Ownership tax
Annual licensing fees
excluding avoidable taxes/levies such as toll fees and parking
Tare weight
Usage tax Transport fuel levies: -General fuel levy-Road Accident Fund levy-Customs and excise levy
Not CO2
emissions
Stage South African taxes/levies
Assessment base
Purchase tax Value Added TaxRegistration feesCustoms and exciseVehicle emissions tax
Selling priceTare weightSelling priceCO2 emissions
Ownership tax
Annual licensing fees
excluding avoidable taxes/levies such as toll fees and parking
Tare weight
Usage tax Transport fuel levies: -General fuel levy-Road Accident Fund levy-Customs and excise levy
Not CO2
emissions
Stage South African taxes/levies
Assessment base
Purchase tax Value Added TaxRegistration feesCustoms and exciseVehicle emissions tax
Selling priceTare weightSelling priceCO2 emissions
Ownership tax
Annual licensing fees
excluding avoidable taxes/levies such as toll fees and parking
Tare weight
Usage tax Transport fuel levies: -General fuel levy-Road Accident Fund levy-Customs and excise levy
Not CO2
emissions
Stage South African taxes/levies
Assessment base
Purchase tax Value Added TaxRegistration feesCustoms and exciseVehicle emissions tax
Selling priceTare weightSelling priceCO2 emissions
Ownership tax
Annual licensing fees
excluding avoidable taxes/levies such as toll fees and parking
Tare weight
Usage tax Transport fuel levies: -General fuel levy-Road Accident Fund levy-Customs and excise levy
Not CO2
emissions
Focus on consumers
Focus on new vehicles
Current status of South African motor industry
No distinction between petrol and diesel driven
vehicles
The purpose of the vehicle emissions tax is to discourage the purchase of vehicles that emit higher CO2 emissions.
A tax benefit (tax deduction) could mitigate the effect of the vehicle emissions tax to act as a deterrent.
Based on study performed:◦Provisions of South African Income Tax Act do allow for a deduction for the vehicle emissions tax.
Vehicle emissions tax (purchase tax) is a step in the right direction
Design could however not be most effective in reducing CO2 emissions
Could be expanded to result in most reduction of CO2
emissions
A “feebate” policy and investing in fuel technologies Consisting of “carrots” (incentives) and “sticks” (additional taxes) Study performed in United States argued the merit and the
importance of manufacturers’ adoption of fuel economy technologies, which accounted for about 90% of the overall increase in fuel economy (Greene et al. 2005:758-759)
Vehicle emissions tax earmarked and allocated to vehicle manufacturers to encourage investment in technology to reduce CO2 emissions
Increasing fuel levies (should be pro-poor)
Introducing new charges (should be carefully considered)
Investigate implementation of a “feebate” policy and investing in fuel technologies
Tax authority
TaxpayersVehicle
manufacturers
Vehicle emissions
taxIncentives
Investments in technology to reduce CO2
emissions
It is not only the government’s responsibility
Creating awareness of “carbon footprint”
Most effective fiscal reform initiative in reducing CO2
emissions might not be one that forces people to contribute, but rather one which encourages people to contribute and then rewards them if they do (Nel 2009:76)
Public participation and discussions among the different stakeholders (government, taxpayers and the motor industry)