David Powels, president of the National Association of Automobile Manufacturers of South Africa (NAAMSA) said the decision was alarming and could have serious consequences for South Africa’s vehicle manufacturing, importing and distribution sectors and associated industries.
Powels said there had been a clear understanding between NAAMSA and the Treasury that a specific CO2 tax regime would initially apply to new car sales in South Africa and that the extension of CO2 taxes to new light commercial vehicles would follow developments in the EU, where CO2 taxes on light commercial vehicles were planned from 2014. But the Treasury stated it was always the intention that “the definition of passenger vehicles would include double-cabs and, by inference, small bakkies, as these are often used as passenger vehicles”..
The automotive industry reacted strongly to government’s announcement that CO2 tax will be charged as a flat rate as part of vehicles’ selling price. Jeff Osborne, CEO of South Africa’s Retail Motor Industry organisation, described the collection plan as ill-conceived, discriminating against buyers who, for various reasons, use their vehicles less.
“As matters stand, new vehicle buyers will pay a flat rate in CO2 tax, calculated at R75/g/km for each 1g/km emitted above 120g/km. That could add R1 500 to the price of a small runabout and as much as R20 000 to the price of a big-engined SUV,” said Osborne.
“What government has failed to consider is that CO2 is emitted only when vehicles are operational. Hence the owner of a small sedan who drives only 10 000km a year pays the same amount of tax as an owner who travels 100 000km.”
He suggested incorporating a CO2 levy as part of the fuel price, so that all CO2 polluters are taxed according to vehicle usage.
The Treasury made it clear that the aim of the green tax was to discourage the use of vehicles that weren’t fuel efficient, and to motivate the shift to more fuel-efficient ones.
But Osborne suggested that government should rather consider making clean fuels available as quickly as possible so that latest-technology, low-emission engines can be introduced to South Africa.