From WB CPD -- To ensure a cost-effective transition, companies receive tax-free allowances ranging from 60 to 95% of their emissions, reducing the effective carbon tax rate to between R6.7/tCO2e and R53.6/tCO2e. The basic tax-free allowance of 60% applies to all taxpayers and companies can use carbon offsets as a flexibility mechanism to increase their tax-free allowances by either 5% or 10% of their emissions. Companies also receive an additional tax-free allowance of up to a maximum of 10% if they are trade exposed and up to a maximum of 5% if they outperform their respective industry's GHG emission intensity benchmarks. These provisions are currently legislated in terms of government regulations. Companies can increase their tax-free allowances further by 5% if they comply with the carbon budget information requirements of the Department of Forestry, Fisheries and Environment .As part of the 2022 budget, the government announced a range of updates to the carbon tax. These changes include an increase in the carbon tax rate from R134/tCO2e to R144/tCO2e for the 2022 tax period. The budget also proposes a range of potential reforms to the transitional phase of the carbon tax. Under the proposal, the transitional phase would be extended by three years to 31 December 2025 and would include other changes to the available support measures, including: adjusting the threshold for the maximum trade exposure allowance from 30 per cent to 50 per cent from 1 January 2023; extending the electricity price neutrality commitment until 31 December 2025; and adjusting the carbon tax rate applied to GHG emissions exceeding the (yet to be legislated) carbon budgets to address concerns regarding double penalties to companies covered by both the carbon tax and carbon budgets. At the same time the government’s proposal includes measures to help promote the transition to a climate-resilient economy and to improve the long-term carbon price signal. This includes a proposal to revise how future carbon tax rates are set. The proposal would increase the carbon tax rate by at least US$1/tCO2e each year to reach US$20/tCO2e per tonne of carbon dioxide equivalent by 2026 and then for the carbon price to increase more rapidly thereafter to at least US$30/tCO2e by 2030 and up to US$120/tCO2e beyond 2050. The government also intends to gradually reduce the basic tax‐free allowances in the period from 2026 to 2030 and to increase the carbon offset allowance by 5 per cent from 1 January 2026 to encourage investments in carbon offset projects. These and other proposals will form part of a review for the second phase, to inform future budget announcements.
From WB CPD -- To ensure a cost-effective transition, companies receive tax-free allowances ranging from 60 to 95% of their emissions, reducing the effective carbon tax rate to between R6.7/tCO2e and R53.6/tCO2e. The basic tax-free allowance of 60% applies to all taxpayers and companies can use carbon offsets as a flexibility mechanism to increase their tax-free allowances by either 5% or 10% of their emissions. Companies also receive an additional tax-free allowance of up to a maximum of 10% if they are trade exposed and up to a maximum of 5% if they outperform their respective industry's GHG emission intensity benchmarks. These provisions are currently legislated in terms of government regulations. Companies can increase their tax-free allowances further by 5% if they comply with the carbon budget information requirements of the Department of Forestry, Fisheries and Environment .As part of the 2022 budget, the government announced a range of updates to the carbon tax. These changes include an increase in the carbon tax rate from R134/tCO2e to R144/tCO2e for the 2022 tax period. The budget also proposes a range of potential reforms to the transitional phase of the carbon tax. Under the proposal, the transitional phase would be extended by three years to 31 December 2025 and would include other changes to the available support measures, including: adjusting the threshold for the maximum trade exposure allowance from 30 per cent to 50 per cent from 1 January 2023; extending the electricity price neutrality commitment until 31 December 2025; and adjusting the carbon tax rate applied to GHG emissions exceeding the (yet to be legislated) carbon budgets to address concerns regarding double penalties to companies covered by both the carbon tax and carbon budgets. At the same time the government’s proposal includes measures to help promote the transition to a climate-resilient economy and to improve the long-term carbon price signal. This includes a proposal to revise how future carbon tax rates are set. The proposal would increase the carbon tax rate by at least US$1/tCO2e each year to reach US$20/tCO2e per tonne of carbon dioxide equivalent by 2026 and then for the carbon price to increase more rapidly thereafter to at least US$30/tCO2e by 2030 and up to US$120/tCO2e beyond 2050. The government also intends to gradually reduce the basic tax‐free allowances in the period from 2026 to 2030 and to increase the carbon offset allowance by 5 per cent from 1 January 2026 to encourage investments in carbon offset projects. These and other proposals will form part of a review for the second phase, to inform future budget announcements.