Tax to add R20 000 to car prices

2010-08-06 07:27

Johannesburg - National Association of Automobile Manufacturers of South Africa (Naamsa) president David Powels has described treasury’s announcement that new light commercial vehicles - like passenger vehicles - will be subject to a new green tax from September 1 as "disturbing".

He said this amounts to reneging on an agreement with the motor industry.

Powels said that Naamsa requested an urgent discussion with Finance Minister Pravin Gordhan about the matter, as well as concerns about the growing disparity between industrial policy and ad hoc fiscal policy implementation.

The tax was announced in the February budget and will be levied at R75 per g/km on vehicles emitting more than 120 g/km CO2.

Powels explained that consultations have taken place with treasury since last August about the introduction of a tax on CO2 emissions.

The consultations were based on the clear understanding and agreement that a specific CO2 tax regime would initially apply to sales of new cars in South Africa and that the extending of the carbon tax to new light commercial vehicles would emulate developments in the European Union where carbon tax is being planned for these vehicles only from 2014, said Powels.

In effect, treasury had gone back on the agreement at this late stage.

Powels said treasury’s decision was apparently based on the perception that double-cab light commercial vehicles are frequently employed as passenger vehicles, although this is not the case as far as single-cab light commercial vehicles and pick-ups are concerned.

The latter represent productive assets of a capital nature that are widely used by small- and medium-sized businesses in the course of running their firms. Naamsa was prepared to enter into discussions on extending the CO2 tax to include double-cab vehicles, Powels said.

According to McCarthy CEO Brand Pretorius South Africa is unique in an international context because it is the only country that is imposing a carbon tax on light commercial vehicles from September 1.

He said that the proposed tax would add about R10 000 to R20 000 to the price of a light commercial vehicle, depending on the model.

Toyota spokesperson Leo Kok has previously said no international data are available to justify the decision to include light commercial vehicles in the tax regime.

Figures announced by Naamsa earlier in the week indicated that the market for light commercial vehicles was still under pressure.

Sales of new light commercial vehicles had fallen 2.9% year-on-year to 10 375 units.


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  • Henry - 2010-08-06 07:54

    Surely the emissions tax should be based on usage. i.e. those that cause the emissions are taxed accordingly. For example I may have a double cab vehicle but only use it once a month whereas a minibus taxi is pumping emissions into the atmosphere at the rate of 10 kilos per day. Gordhan needs to rethink this one. Or is it a mindset of tax the hell out of the motor industry - until it can't anymore?

  • red - 2010-08-06 07:58

    wonder how much the tax payer will dock up for government officials hummers and 8V AMG SUV's?

  • jason - 2010-08-06 08:20

    it could add on R20K, or car manufacturers could reduce the price. Parasites

  • Calderis - 2010-08-06 08:51

    I understand the “ green tax system “ but I want to know is why only south Africa.. and what are they going to do with the money…? Surely if they implement this Tax its because they need to use it to in prove some system…..??? Where is the money going to?

  • Johnathan - 2010-08-06 08:56

    They only care about getting the money in TODAY, they don't care if they are killing and cooking and eating the golden goose (the private business sector) and having nothing left TOMORROW. It's not about protecting nature either.

  • James Thorpe - 2010-08-06 09:14

    Meddling govt do-gooders! Green tax, indeed. Where is that money going to go?? Funnelled into another stupid project like the fuel-cell cars or something that is poorly administered and just a waste all round with officials and committee members and a bloated civil service taking their cut? When you do the carbon accounting on the whole thing more carbon will be produced overall by this scheme and all at the expense of the economy.

  • AJ - 2010-08-06 09:24

    If there was no pending tax the manufacturers would have been increasing their prices by the same or more; as per usual. Whilst they might think the green tax is dusturbingm the public think the manufactureres increases (every year) are more disturbing.

  • Aqua - 2010-08-06 10:19

    Clean the SA water resource first. This is a matter of life and death for the nation. Then think about vehicles. SA's vehicle density is such that it doesn't warrant an emissions tax yet.

  • Jo - 2010-08-06 10:48

    We already have to pay exorbitant prices for vehicles in this country - surely this should be an indication to the manufacturers to rethink their prices?? Then again - South Africans are sheep and will buy the new cars no matter how much they cost just because its cool to have a shiny new car...

  • Dre - 2010-08-06 11:12

    Agree this is govt just looking for cash however it can justify it (how to pay for all those Mount Nelson stays?) but I'm glad that tax is coming. Maybe now those who seek to compensate with their giant polluting double cabs and SUVs when the only thing they ever out in the back is a woolies packet will think twice.

  • Bob - 2010-08-06 11:15

    Couple of points 1) Double taxation is against the priciples of the Income Tax Act. There is already a tax on fuel going into vehicles. 2) Taxes need to be applied consistantly and fairly. If this a truly "green tax", then ALL vehicles should be tested and taxed accordingly. 3) Why only new cars? Older and poorly maintained vehicles are responsible for more CO2 emmissions than new cars. If the ultimate aim to reduce co2 emmissions, I would suggest we start by applying the existing laws properly. Vehicles laying down so much smoke that they affect visability should be removed from our roads before we implement taxes that will only have the effect of lining the states coffers at the expense of jobs.

  • TurboChris - 2010-08-06 11:43

    The second hand car market is going to boom! If the govermant wants to impose europeen taxes then they must adopt their suytems as well, So once a year your car will need a MOT and be tested for roadworthy. Another question is can vehicle manufactures make our cars greener? Is it possible or does our fuel fall short of achieving this, if it can't then ethically they can't charge us emissions taxes.

  • Marco - 2010-08-06 11:50

    Why not tax the yearly lisence? That way they will catch old and new cars. They are forgetting that the new credit act makes it more difficult to buy. increase in price will make it even more difficult.

  • CoughSplutterAargh - 2010-08-06 11:53

    Tax on tax again!!! Crikey, this reminds of all the VAT collected by the govt on security products and services that we pay for since they can't keep us safe.

  • Russel - 2010-08-06 11:59

    Green Tax, toolgate fees, what's next. Whom gets the green tax and how is it spent to curb CO2 emissions? The motorist gets milked again?

  • Nokka - 2010-08-06 12:52

    A couple of points to consider re CO2 tax. 1) They're taxing the potential to pollute, not the act of polluting itself, which is wrong, of course. If you buy an X5 but only use it on a weekend, and your neighbour use his new GTI everyday to travel to work and back, the GTI will pump out more CO2 than the X5, thus releasing more CO2. But, this GTI owner had to pay only a tenth of the CO2 tax than the X5 owner. Use, and not potential, is the crux here. Incorporate the tax into the fuel price, so that the person who use more fuel and thus pollutes more, pay more tax. 2) Because its a once off tax, paid upfront when you buy a new car, it doesn't encourage "green" driving habits. Once you've bought your car, there is no more incentive to change your driving style to become less pollutant and to have a smaller impact on the environment. You've paid your tax, and now you can do whatever you want with your car and the CO2's youre pumping out. 3) Government must force the petroleum industry to manufacture cleaner fuels in SA. Currently our fuel is at Euro2 levels, around 500 ppm in petrol and diesel. In Europe they're using EuroV, with EuroVI around the corner. Their petrol is at a level of 4 ppm, vs our 500. Thats a big discrepancy. So, if government helped industry to supply cleaner fuels, the environment would be helped as well, in a jiffy. 4) By not forcing industry to supply cleaner fuels, our manufacturers can't import their new, modern clean burning engines. These engines emits less CO2 and use less fuel than the current engines. But, they can only run on EuroIV fuel, and not on our dirty fuels. Therefor, you and i are paying more CO2 tax as the older engines have higher CO2 ratings, and they are more expensive to run with heavier fuel usage. 5) This green tax, will it go into a specific, ringfenced kitty for green projects, or as we suspect will it be used in the big, general tax income of SA from where it will be used for state grants. Remember, for every tax payer there are four recipients of state grants - the highest ratio in the world, and this in a developing country! Makes one think.

  • JB - 2010-08-06 13:37

    We the tax payers have got to do something about this. The government keeps throwing new taxes at us and we lie down and accept it.The time has come to stand up and do something. It is us that keeps the country afloat - government needs to recognise that and listen to us. Come on people let do something! Imagine what the impact would be if the taxpayers went on strike for one day - that includes businesses.

  • JB - 2010-08-06 13:47

    The govt has been toying with the idea of a luxury taxes for sometime now - well guess what here is one of many to come.

  • Lost - 2010-08-06 14:22

    If you are white are black, it doesn't matter, government is out to cream you and pillage every cent they can lay their sticky fingers. SA doesn't have a corrupt government, it is super corrupt in nature!

  • Greenie - 2010-08-25 08:29

    Finance Minister Pravin Gordhan ,You dear Sir are a TIT!!You are trying to implement First World rules in a 3rd World country.I wonder if you will pay this tax yourself?,probably our tax dollars hard at work?

  • Joe - 2010-08-26 18:05

    We pay excessive prices here in SA for cars and the manufacturers have been profiteering off us. So instead of taking the tax from the consumer, keep car prices fixed at what they are and take it from the manufacturers bottom line. Why does a car made here cost less overseas? I am sure R20-R30K will hardly dent the bottom line of the manufacturers especially in the light commercial vehicle sector.

  • WDA - 2010-08-26 18:14

    Another blind attempt to apply first world ideals in a suffering third world economy. How about abolishing/lowering the import/manufacturer tax on cars like they do in the EU states? Yeah, a case of cake and eat it. We are paying way to much in relation to our incomes towards transport. Mmmmmm... these ideals. very Thabo Mbekhi like. RaRaRaRa

  • Lou - 2010-08-26 19:09

    More to steal. Pay up and look pleasant.

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