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  • Published: Aug 13th, 2010
  • Category: Global
  • Comments: 3

State puts cart before horse on vehicle carbon tax

| Sourced From Busrep |

The way the government is introducing a carbon dioxide emissions tax on new cars is unfair on consumers and looks like a revenue-raising fiscal intervention rather than one aimed at equitably limiting harm caused to the environment.

The National Treasury has confirmed that minibuses and midibuses will receive a special exclusion from the emissions tax on cars and light commercial vehicles, which comes into effect from September 1. This exclusion is because these taxi vehicles are used for public transport. But what is the principle that guided the decision to exclude taxis? That it is okay to cause harm to the environment without any consequences if it is in the public interest?

Motor manufacturers and analysts support the principle behind the introduction of a vehicle environmental tax, but are strongly opposed to the way it is being introduced. They favour a fuel levy rather than a tax on the retail price of vehicles.

A fuel levy means everyone, no matter what vehicle they drive, will pay the tax – and the amount of tax each individual or company pays will be proportional to the emissions they generate. The more they drive, the more they pay. That seems fair.

Consumers are largely unable to do anything to limit their exposure to the tax, particularly as motor manufacturers are unable to introduce the more efficient and lower emission engines to the vehicles they sell in the country because the quality fuel required by hi-tech engines is not freely available in South Africa. This has led to accusations that the government is putting the cart before the horse.

The government’s counter argument appears to be that engine size is also a proxy for emissions because the bigger a vehicle’s engine, the more emissions it emits and the tax will change purchasing decisions by forcing consumers to buy vehicles with smaller engines.

There might be some merit in this argument until you consider the types of vehicles that are used to transport government ministers and senior officials. These vehicles are paid for with taxpayer’s money and these ministers and officials will not be hurt by the emissions tax, making it unlikely they will change their purchasing habits. In other words, they are unlikely to “walk the talk”.

Another issue is consistency in applying environmental taxes. Why, for instance, should cars and light commercial vehicles be singled out? And where is the alignment in the government’s policy on environmental taxes when it ignores the harm that will be caused to the environment by its coal-fired power station expansion programme and the aviation industry.

Related posts:

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  2. Toyota boss calls for postponement of proposed CO2 vehicle tax
  3. Canada: Heavy-Duty Vehicle Carbon Emissions Regulations
  4. Edmonton rethinks $82M plan to cut vehicle emissions
  5. Electric cars mean more CO2

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