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Parliament Updated on Carbon Tax Policy

August 24, 2021

National Treasury

National treasury has updated parliament on the Carbon Tax Policy and sustainable finance initiatives.

The Carbon Tax Act came into effect on 1 June 2019.

In the briefing to the portfolio committee on environment, forestry and fisheries, treasury indicated that the “Carbon Tax was introduced at a very low effective carbon tax rate with significant tax-free emission allowances ranging from 60 per cent to 95 per cent to provide current significant emitters time to transition their operations to cleaner technologies through investments in energy efficiency, renewables, and other low-carbon measures”.

Treasury pointed out that the Green Finance Taxonomy was released for public comments in June 2021 and is undergoing case study testing in nine financial institutions.

A Green Finance Taxonomy is described as an “official classification or catalogue that defines minimum criteria for assets, projects, and sectors that are eligible to be defined as “green” in line with international best practice and national priorities”.

According to treasury, a Green Finance Taxonomy addresses climate change and other environmental priorities while simultaneously seeking to reduce social risks and enhance social impacts.

“A Taxonomy helps investors, issuers, and other financial sector participants to track, monitor, and demonstrate the credentials of their green activities in a more confident and efficient way.”

The Draft Green Finance Taxonomy flows from the Draft Technical Paper on Financing a Sustainable Economy published for comment in May 2020.

A handbook on sustainable finance methodologies and instruments is also being finalised in conjunction with the guidelines for climate related disclosures by local financial institutions.

Treasury also informed the committee that a Draft Carbon Tax Review Paper outlining policy design options for the carbon tax for the 2nd phase from 1 Jan 2023 is being finalised.

The plan is to publish the Paper for comment later this year.

Treasury added that this will inform policy proposals on the Carbon Tax design to be announced in Budget 2022.

Meanwhile, in Gazette 45032, the South African Revenue Service published an amendment to Schedule 2 of the Customs and Excise Act.

The amendment focuses on revised anti-dumping duties on frozen chicken imported from Germany, the Netherlands and the United Kingdom.

In Gazette 45015, the Reserve Bank announced the appointment of Clicksendnow (Pty) Limited as an authorised dealer in foreign exchange with limited authority for the purpose of Exchange Control Regulations.