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THE new carbon dioxide (CO2) emissions tax on passenger cars takes effect today despite concerns over its potential negative effect on new vehicle sales, which are already slowing down.

This green tax, which is meant to encourage consumers to buy cars that emit less CO2, will be added on to a new cars price and it will range from 0.6% to 4.1%, depending on how much of the gas cars spew out.

Nico Vermeulen, executive director of the National Association of Automobile Manufacturers of SA (Naamsa), said a 2.5% increase due to the new CO2 tax will reduce car sales by 4% to 5% or more.

During last month, WesBank, the vehicle financier, warned that the new carbon tax threatened to put the brakes on new vehicle sales.

Naamsa has said the new tax adds costs to consumers.

Based on current sales volumes, the incremental tax burden amounts to about R1.6-billion a year in respect of new passenger cars.

It is unclear yet if car manufacturers will pass on the new tax to consumers or absorb it within their cost structure.

Vermeulen said two carmakers have said they will pass on the carbon tax to consumers.

Toyota SA spokesman Leo Kok said the new tax had to be levied and would be clearly communicated to customers when purchasing a vehicle.

He said the company would monitor the effect of the tax as soon as it is introduced today.

Toyota SA had been opposed to the tax from the outset, he said.

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Tags: Carbon Emissions, Carbon Tax, CO2