Wednesday, February 20, 2008

Environmental fiscal reform: 2 cents per KwH

In the Budget speech 2008 presented today, Min. Trevor Manual announced a new environmental tax on electricity use. A full extract of the speech:

Supporting sustainable development
...I have indicated that we also have to focus more clearly on our longer term responsibilities.
The Treasury circulated a draft policy paper on environmental fiscal reform to key
stakeholders in 2004, and then published it as a revised discussion paper in April 2006.
Since then, the United Nations International Panel on Climate Change, in which a South
African team led by the Department of Environmental Affairs and Tourism played an
active role, has added impetus to the need for policy change.

Options that will now come under scrutiny for implementation include the use of
emission charges and tradable permits, tax incentives for cleaner production
technologies and reform of the existing vehicle taxes to encourage fuel efficiency. A
proposal to encourage biodiversity conservation by private landowners through an
income tax deduction is under consideration.

There is much to be done to develop specific and practical measures to support
sustainable development, both on the tax and the spending side of the budget. I hope
that this House will encourage an energetic debate – if that is the right word – and we
have to work hard at developing an understanding between very diverse groups of
people: scientists, environmental activists, engineers, businessmen, workers, policy
advisors, regulators, and every one of us who enjoy the ordinary privilege of having
access to light, heat, cooling, television, transport, communications and so much else,
at the flick of a switch or the press of a button.

As a first step towards appropriately targeted fiscal environmental measures, and in
support of the required demand-side response to power supply shortages, a new levy
will be introduced this year on the sale of electricity generated from non-renewable
sources, at a rate of 2 cents per kWh. It will be collected at source from the electricity
generator, and is expected to raise about R2 billion in 2008/09 and R4 billion a year

Madam Speaker, we know that the introduction of a new tax is never a popular move.
However, this is an instance where we hope that people will succeed in avoiding the
tax. Households and businesses who reduce their consumption by 10 per cent or more
will find that this levy does not affect their monthly costs.

No comments: