Carbon tax to increase price of fuel and electricity, says expert
Energy expert Ted Blom has warned that the introduction of carbon tax could make South African one of the most expensive places on earth to live by driving up the prices of electricity and fuel.
President Cyril Ramaphosa signed into law a carbon tax to cut emissions in the continent's worst polluter, the Treasury said Monday, drawing cautious praise from environmentalists.
The tax, a rare step for an emerging economy, will be levied from June 1 on greenhouse gases from fuel combustion and industrial processes and emissions.
The tax was first planned in 2010, but has been delayed by opposition from business and industry in a country struggling with low growth and unemployment near 28 per cent.
Blom says the introduction of the tax could lead to more job losses.
"So I understand that as soon as this government sees the negative impact of carbon tax they'll probably, hopefully, abandon this taxation.
“Unfortunately the pain that comes with it is you'll see more job losses, probably more than 50 000 in the mining industry and the smelting industry, even as far as the chemicals and bakery industry. It's a wide-ranging tax, it's going to hurt very hard for people who can least afford it."
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He predicts fuel prices will rise by 9c per litre and electricity by at least 5 to 10% on top of the already subscribed increases.
"The already expensive electricity which is going up now - for Eskom customers went up in April by double the inflation rate 14% - will go up by another 5-10% really it makes life in South Africa the most expensive place on Earth."
Blom says the move to sign the tax into law doesn't make sense.
"The fact if the matter is if you want to promote heavy industry depreciation which is what this government said they want to do then you need to have energy-intensive processes and players in the game and by putting in the carbon tax you actually disincentivizing the use of energy.
"South Africa has cheap energy globally and it is our strategic advantage. For us to go and shoot ourselves in the foot by making it the most expensive energy from the cheapest - or it used to be prior to Eskom getting hijacked in 2007 - it just doesn’t make sense to me."