The long awaited and controversial Carbon Tax Bill was published on Monday 2 November 2015 for public comment to the National Treasury by 15 December 2015. The Bill is a product of about five years of public participation following the 2010 edition of the Carbon Tax Policy Paper (later the updated Carbon Tax Policy Paper 2013 and the 2014 Carbon Offsets Paper).

According to the Bill, the commencement date for the carbon tax laws is 1 January 2017.

Industry players have long been nervous about this development, particularly from an economic impact point of view on businesses. However, once promulgated, the carbon tax laws will be gradually phased in, meaning that the full might of the proposed framework will not be felt immediately by tax payers, at least not until 2020. This initial phase is intended to encourage investments in and the uptake of more energy efficient and low carbon technologies.

The key design features of the carbon tax laws are a statutory rate of R120 per tonne of carbon dioxide equivalent and a number of transitional tax-free allowances can result in a significantly lower effective carbon tax rate between R6 and R48 per tonne CO2e. Over time (i.e. post 2020), these tax-free allowances could be phased down.

The carbon tax liability is calculated as the tax base (total quantity of greenhouse gas emissions from combustion, fugitive and industrial processes proportionally reduced by the tax-free allowances) multiplied by the rate of carbon tax.

The Bill, explanatory memorandum and media statement can be accessed here.