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MOTORING: RMI Challenges Government's CO2 Tax Plan


Recent Gauteng Business News

South Africa’s Retail Motor Industry organisation (RMI) has lent its full support to the urgent call by the National Association of Automobile Manufacturers of South Africa (Naamsa) for Government to reconsider aspects of vehicle emissions tax, scheduled for implementation on September 1.

Jeff Osborne, CEO of the RMI, says it is imperative that issues regarding the introduction of the tax are resolved, including Government’s abrupt decision to extend its reach to incorporate light commercial vehicles (LCVs).

Further, he says motor industry sources have indicated that VAT could be payable on the tax – which will be incorporated into the selling price of the vehicle – effectively upping the cost from R75 g/km over 120g/km to R85,50 g/km.

With regard to the LCV issue, Osborne says: “Currently, there is no internationally applied test-method for determining CO2 emission levels on LCVs. Accuracy in this respect is essential. On what criteria will Government base its tax system? Engine capacity alone cannot be used as a guideline, contrary to what National Treasury officials have indicated.

“Further, to contemplate charging VAT on emissions tax is iniquitous – yet some manufacturers in the industry have been informed that this will be the case. The Honda Motor Company of South Africa, for instance, has gone on record as saying it believes that VAT will be applied.”

Osborne says the RMI will join forces with Naamsa in its request for an urgent meeting with Finance Minister Pravin Gordhan to address the issues. “The motor industry is still in the process of recovering from the effects of recession.

“To introduce a tax that will force upwards by at least 2,5% the cost of the vast majority of the country’s new cars and bakkies will serve to depress sales at a time when the market requires exactly the opposite.

“The effect on the industry will be severe, with negative implications for employment in the vehicle retail, manufacturing and component industries.”

Osborne points out that the RMI has already brought to Government attention the fact that the organisation believes that, in its present form, implementation of the new tax regime is discriminatory, designed to drive consumers to the second hand market which is dominated by older vehicles that are less fuel efficient than new ones.

“If Government were serious about improving the quality of the environment, it would consider as a priority incentives to consumers to drive vehicles that pollute less. As matters stand, the country is legislated to comply only with Euro II fuel standards, while newer technology engines – which use less fuel and therefore emit less CO2 – require higher quality, cleaner petrol and diesel.

“To my knowledge, South Africa is the only country in the world to have introduced a green tax without allowing motorists the option of switching to cleaner vehicles – and the irony is that some of those cars are made here for export.”

Osborne says in the RMI’s view, the fairest and most equitable way of applying emissions tax is to introduce a levy on fuel. “Instead of solely penalizing new car buyers – as implementation of the new tax will do – Government should look to tax all polluters by incorporating a green levy in the price of fuel. Motorists who use less fuel – and thereby emit less CO2 – pay less tax.”

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