A carbon tax simply penalises companies and individuals that emit more carbon. Emissions can occur from various sources although the most common being transportation and electricity usage.

To put this into perspective, 1kg of CO2 is emitted for every kilowatt hour of energy produced and consumed in South Africa. The net result is that becoming energy efficient and lowering energy consumption becomes increasingly important. Companies have said that a carbon tax that places too heavy a burden on the key energy, mining and manufacturing sectors (which are already under pressure due to rising power and wage costs and the current economic climate) will impact profits and wider economic growth.

The government can effectively curb such pressures by revenue recycling and tax shifting.
Government has proposed a carbon tax of R120 per tonne of CO2e (carbon dioxide equivalent) on scope 1 emissions.

The tax will come into effect on 1 January 2016, and increase by 10% a year. Thresholds will apply in the first 5 year phase. The carbon tax will be designed to create incentives for companies, businesses and individuals to change their behaviours and consumption patterns to reduce the reliance on fossil fuels.

For more info on how much you would be potentially taxed from 2016 on fuel click here