Carbon tax to lower emissions: The likely impact of carbon emissions tax on households in South Africa

• Jurisdiction: South Africa
• Pages: 211-227
• Published date: 16 February 2021
• Date: 16 February 2021
• Author: Siweya, N.
• DOI: https://doi.org/10.47348/AMTJ/2021/i1a12
• Citation: (2021) 1 AMTJ 211

211

CARBON TAX TO LOWER EMISSIONS:THE LIKELY IMPACT

OF CARBON EMISSIONS TAX ON HOUSEHOLDS IN SOUTH

AFRICA

LA TAXE CARBONE POUR LA REDUCTION DES EMISSIONS:

L'IMPACT PROBABLE DE LA TAXE SUR LES EMISSIONS DE

CARBONE SUR LES MÉNAGES EN AFRIQUE DU SUD

IMPOSTO DE CARBONO PARA MENORES EMISSÕES:

O PROVÁVEL IMPACTO DO IMPOSTO DE EMISSÕES DE

CARBONO NAS FAMÍLIAS NA ÁFRICA DO SUL

Nkhensani Siweya*

JEL Classification: E62, F42, H20, H23, Q28, Q43

https://doi.org/10.47348/AMTJ/2021/i1a12

ABSTRACT

The South African government, along with other countries, has signed the Paris

Agreement to commit to lowering carbon dioxide emissions. This has led to the

introduction of carbon tax in different countries to combat global warming. The

Mexican government was the first to introduce carbon tax amongst the emerging

economies ba ck in 2014, while the Argenti ne government implement ed carbon tax in

January 2018. The South African government followed suite and introduced carbon

tax effective 5 June 2019. Households are expected, however, to be weighed down

by the levy as t he carbon fuel levy will be i mplemented at 9 and 10 cents per litr e on

petrol and diesel re spectively. The impact on strained ho useholds’ income is expected

to emanate from the already high fuel prices, which have been on a rising trajectory

since the beginning of 2019.

Keywords: carbon, emissions, households, tax

RÉSUMÉ

Le gouvernement sud-africain a signé l’Accord de Paris avec d’autres pays pour

s’engager à réduire les émi ssions de dioxyde de carbon e. Cela a conduit à l’introduction

d’une taxe carbon e dans différents pays po ur lutter contre le récha uffement climatiqu e.

Le gouvernement mexicain a été le premier à introduire la taxe carbone parmi les

économies émergentes en 2014, tandis que le gouvernement argentin a récemment

mis en œuvre une taxe carbone à compter de janvier 2018. Le gouvernement sud-

africain a fait de même et introduit une taxe sur le carbone qui est entrée en vigueur

le 5 juin 2019. On s’attend à ce que la taxe pèse sur les ménages, puisque la taxe

sur le carburant carbonique sera appliquée à 9 et 10 centimes par litre d’essence et

de diesel respectivement. L’impact sur le revenu à rude épreuve des ménages devrait

* Functional Analyst: Economist, South African Revenue Service (SARS): nsiweya@sars.gov.za.

(2021) 1 AMTJ 211

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212AFRICAN MULTIDISCIPLINARY TAX JOURNAL

provenir des prix déjà élevés du carburant, qui sont sur une trajectoire ascendante

depuis le début de 2019.

Mots-clés: carbone, émissions, ménages, taxe

ABSTRATO

O governo sul- africano assino u o Acordo de Paris, juntamen te com outros países, para

se comprometer a reduzir as emissões de dióxido de carbono. Isto levou à introdução

do imposto sobre o carbono em diferentes países para combater o aquecimento global.

O governo mexicano foi o primeiro a introduzir o imposto sobre o carbono entre

as economias emergentes em 2014, enquanto o governo argentino implementou

recentemente o imposto sobre o carbono a partir de Janeiro de 2018. O governo sul-

african o também acompanhou e introduziu o i mposto sobre o carbono, que entrou em

vigor a partir de 5 de Junho de 2019. Prevê-se que os agregados familiares sejam

abrangidos pela ta xa, uma vez que a taxa sobre os combustí veis de carbono deverá ser

aplicada a 9 e 10 cêntim os por litro na gasolina e no gasóleo, re spectivamente. Espera -

se que o impacto no rendimento das famílias já em dificuldades se agrave devido aos

elevados preços dos combustíveis, que têm estado numa trajectória ascendente desde

o início de 2019.

Palavras-chave: carbono, emissões, agregados familiares, impostos

I INTRODUCTION

The world is facin g global warmi ng, which is considered the bigg est risk

facing humankind yet. It is caused by air pollution, the burning of fossil

fuels and littering. Parryet al (2017) found that there was an increase

in mortality rates due to air pollution in 2010, with China, Poland

and Egypt having the highest mortality rates. Amongst these countries,

China has the highest average level of pollution concentration. The

high outdoor air pollution in China is on the back of coal that is used

as a source of energy. South Africa was among the lowest along with

Brazil, Chile and Australia. Although it was the lowest, the country

needs to take action now and take charge of the situation before it

worsens. The mortality rate in South Africa is below 100 per million

compared to China where it exceeds 900 deaths per million people

(Parry et al, 2017).

Globally, several countries united to combat pollution across the

world and in their respective countries. The United Nations indicated

that in ‘December 2015, members of the United Nations Framework

Convention on Climate Change’ reached an agreement to sustain lower

carbon emissions through different instruments. Since the adoption

in 2015, 197 countries had signed the agreement in November 2019.

According to Pearce (1990), carbon tax and tradeable carbon emission

permits are required to reduce emission. The BP Statistical Review

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