South Africa’s proposed taxes on gas emissions will not impact already high electricity prices, nor will it add pressure to sectors such as the mining industry, the Treasury said on Monday.
The carbon tax, part of government efforts to reduce harmful emissions in Africa’s worst polluter, was postponed two years ago to 2016 after fears from industry that it would hurt profits already eroded amid a global commodities slump and higher electricity tariffs.
In the draft bill, Treasury lists a number of allowances to mitigate the impact the tax would have on industries.
Tax-free exemptions would range between 60 and 95% of total emissions, Treasury said.
“Taking into account the current state of the mining and other distressed sectors, the combined effect of the rates (and) exemptions in the carbon tax and the reduction in electricity levy will be designed to ensure that such sectors are not adversely affected,” the National Treasury said in a Draft Carbon Tax Bill released for public comment.
“The tax-free percentage thresholds will remain fixed during the first phase, until 2020. The percentage tax-free thresholds might be reduced thereafter or may be replaced with absolute emission thresholds.”
South Africa’s beleaguered mining ministry has held many rounds of talks with companies and unions over planned job cuts, as President Jacob Zuma’s government frets over high unemployment ahead of key local elections next year.
Firms in the mining industry, which contributes around 7% to Africa’s most developed economy, have warned that they have to cut costs and close struggling mines to cope with sinking commodity prices, rising costs and labour unrest.
Other sectors of the economy are also struggling.
South Africa has slashed its 2015 economic growth predictions to 1.5% from February’s forecast of 2% as an electricity supply crunch and weak business confidence derail government efforts to reduce poverty.