Friday, November 23, 2007

Before designing those carbon taxes..

National Treasury has released a document with proposals on further green taxes. This proposal should not be seen in isolation from climate policy developments in the the rest of the world. The Economist reports that the America's Climate Security Act (ACSA), although not liely to be passed soon, does support a cap-and-trade system with the possibility of border taxes for carbon intensive imports.

What does this mean for South Africa? Over and above the real threat of border taxes on carbon-intensive products, it does raise the question whether South Africa should not consider formally linking up to an emissions trading scheme in future. The CDM does provide a link to the EU ETS, but comes at the expense of higher transaction costs. We have a lot of carbon to sell, concentrated in one or two sectors and maybe at lower prices then Europeans and Americans can manage themselves.

Then we can still think about punitive taxes should we not meet local desired outcomes.

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