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Cape Town - South Africa's carbon tax aims to change the behaviour of companies, while incentivising a shift towards cleaner technology, the National Treasury said on Monday.
The National Treasury published its Draft Carbon Tax Bill for public comment on Monday, following the announcement made by the Minister of Finance in the 2015 budget.
According to Treasury the tax has been designed to ensure that its overall impact will, in the initial phase, be revenue neutral, and also neutral on the price of electricity.
"Taking into account the current state of the mining and other distressed sectors, the combined effect of the rates/exemptions in the carbon tax and the reduction in electricity levy will be designed to ensure that such sectors are not adversely affected when the tax is implemented," it said.
The bill's tax-free exemptions will range between 60-90% of total emissions.
"This implies that the carbon tax will be imposed on only 5-40% of actual emissions during this period," Treasury said.
"The carbon tax will assist in reducing Greenhouse Gas emissions and ensure that SA is ready ... to deal with future climate risks and challenges, and also be in a position to take advantage of new investment opportunities."
Treasury said that the impact of the tax on the economy could only be assessed after taking into account both the "direct impact" of the tax, as well as "the way the resulting revenue was spent".
"To assess the impact of the tax, the revenue recycling measures must be taken into account," it said.
Treasury said it had undertaken various economic modelling exercises to estimate the impact of a carbon tax.
One of the models indicated that the carbon tax would "only have a marginal negative impact on economic growth over the short-term".
"Over medium to long term, the carbon tax will support the transition to a more sustainable low carbon economy and green jobs," Treasury said.
