In February of 2012, the National Treasury will publish its verdict with regards to carbon tax legislation in South Africa. Fleet management professionals and major players in the transport, mining and manufacturing industries are currently engaging heavily with government in order to reach an amicable and mutually beneficial solution aimed, essentially, at moving South Africa’s economy towards a more sustainable and environmentally friendly future. The legislation will have far reaching consequences for business across the board and opinions seem to be polarised considerably.
Where everyone seems to agree though, is that government needs to examine, in detail, the indirect costs that carbon taxation could generate for businesses. These costs could seriously affect the competitiveness of the country’s logistics and supply chain sectors and have a major impact on consumers and end users.
The proposed tax has garnered harsh criticism from industry professionals. Dr. Jan Havenga, the head of the Centre for Supply Chain Management at Stellenbosch University is not optimistic with regards to the proposed tax. Commenting on the potential effects on the transport and communication sector, Havenga says; “a carbon tax could increase the effective tax rate of the industry by at least 14.5%. This would, in all likelihood, make South African logistics costs much higher and would mean that the competitiveness of the country would be under further threat.” Well over 80% of South Africa’s freight is moved by road and Sharmini Naidoo, the Road Freight Association’s Chief Executive Officer sees a major flaw in the carbon tax plan. She explains that “ironically, it is the SMMEs who would be most severely impacted by the tax – the very sector that government aims to support. Not only this, but the tax will also impede economic growth and job creation.”
Despite these compelling arguments, South Africa’s approach to establishing the carbon taxation legislation has been lauded by several major players. Anglo American CEO Cynthia Carroll recently stated, that “the process the South African government was adopting in formulating a carbon tax policy was far preferable to that in Australia”. That country’s carbon tax implementation strategy was widely criticised by investors for excluding major industries in establishing the rates and for not allowing enough time for business to implement new systems in order to cut their carbon emissions.
Regardless of the outcome, South African companies will need to start investing in carbon cutting measures as soon as possible. Even enterprises that lack the funds to undertake serious carbon offsetting initiatives can ensure efficiency and reduce wastage to a minimum through the use of intelligent fleet management systems and vehicle tracking systems.
Whether through more fuel efficient fleets, improved fleet management, or carbon offsetting, it seems South African business fleets will soon have no choice but to comply with global carbon emission standards.
