Changes in carbon tax rates

In terms of section 5 of the Carbon Tax Act 15 of 2019 (Carbon Tax Act), the carbon tax rate must increase annually by the change in the November consumer price index as determined by Statistics South Africa, compared with the November consumer price index that falls within the tax period, plus 2%. Pursuant to this, it was announced that the carbon tax rate for the 2022 tax year (January to December) would increase from R134 per tonne CO2e, to R144 per tonne CO2e.

25 Feb 2022 1 min read 2022 Special Edition Budget Speech Alert Article

As a result of this increase in the carbon tax rate, the carbon fuel levy, which is administered under the fuel levy regime will also increase by the same percentage. The carbon fuel levy for 2022 will increase by 1c to 9c/l for petrol and by 1c to 10c/l for diesel from 6 April 2022. It must be appreciated that this levy is separate from the general fuel levy and the road accident fund levy.

On the plus side, it is proposed that the carbon tax cost recovery quantum for the liquid fuels refinery sector will increase from 0,56c/l to 0,63c/l (in effect since 2020). It remains to be seen whether the benefit enjoyed by refineries, by virtue of a potentially decreased carbon tax liability will be passed on to consumers.

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