| Environmental Reforms Highlighted in the Budget |
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| Deborah Tickle | |||
| Wednesday, 18 February 2009 | |||
  A number of environmental reforms and incentives were proposed by the Minister of Finance, Mr Trevor Manuel, in his Budget Speech 2009. These were proposed as a domestic response to the global challenge of climate change, since South Africa is currently in the top 20 in the world in greenhouse gas emissions. At the same time, some of them perhaps created a little extra leeway for Minister Manual to reduce bracket creep and hand R13.6 billion back to taxpayers this year: Plastic Bag Levy The levy on plastic shopping bags will be increased by 1cent to 4 cents per bag from 1 April 2009. Taxation of Incandescent Light Bulbs It is proposed that an environmental levy of approximately R3.00 per light bulb be levied on incandescent light bulbs at the manufacturing level and on imports of such light bulbs from 1 October 2009. This will promote the purchase of energy saving light bulbs which save electricity and last longer than the incandescent bulbs. The Minister of Finance recognises that fuel efficiency plays an important role in controlling greenhouse gas emissions, and, therefore, proposes that from 1 March 2010 carbon dioxide emissions be considered when calculating ad valorem (Latin for “according to value”) excise duties. In addition, it is proposed to reduce the current "luxury" ad valorem excise duties on new motor vehicle sales, while simultaneously introducing an additional component to the ad valorem duty to take into account carbon dioxide emissions. This proposed structure will also take effect from 1 March 2010. Incentives for cleaner production - energy efficiency Currently legislation provides for a 50:30:20 percent accelerated depreciation allowance for investments in renewable energy and biofuels production. The Minister of Finance now proposes an additional 15 percent allowance for investments by companies in energy-efficient equipment, provided documentary proof (accredited by the Energy Efficiency Agency) is provided of the resultant energy efficiency. Emission reduction credits from clean development projects There is uncertainty in respect of how to treat certified emission reductions (established in terms of the Kyoto Protocol) from a tax perspective in South Africa. This may be a reason why clean development mechanism projects have been so slow to take off in this country. Accordingly, it is proposed that income derived from primary certified emission reductions (CER) be tax exempt or subject to capital gains tax instead of normal income tax. In contrast, secondary certified emission reductions are to be classified as trading stock and taxed accordingly. Primary CER's are provided to entities that demonstrate a reduction in their own greenhouse gases and this is clearly the desired effect, hence the income from these will be subject to no or limited taxes, versus those entities which effectively trade in the CER's like any other financial instrument.
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