Carbon Tax’s Effect on SA’s Road Freight Sector

The road freight industry is one of the highest taxed industries in South Africa. Coupled with the continuous rise of petrol and diesel prices, this industry is heavily burdened and will not easily absorb a carbon tax.

Carbon tax is set for implementation in South Africa on January 1. While the addition of a carbon tax might help reduce emissions, many speculate that it will hold negative consequences for the road freight industry which is already  under exorbitant financial pressure owing to road user charges, cross border taxes, vehicle licensing fees, inspection fees, legal requirements, tolling and the much debated e-tolling system which Sanral promises will be ready by the end of 2013.

While everyone agrees that global warming has become a crucial concern, with companies in South Africa placing more emphasis on environment-friendly practices, energy savings, logistics software and mobility, some claim that the cost of carbon tax will not easily be absorbed into South Africa’s economy with energy intensive user groups stressing that they will bear the brunt of the tax.

The Road Freight Association (RFA) has warned that the new tax would reduce South Africa’s competitiveness and would fall heavily on the road freight industry which “has low margins and keeps the wheels of South Africa’s economy turning.”

The RFA noted that while the road freight industry was already faced with numerous rising costs, the proposed carbon tax would have a serious impact on the cost of logistics, rendering road transport uneconomical. “Over 80% of freight is currently moved by road. Transport costs are already unacceptably high – 14.6% of GDP.”

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