By Caroline Rheeder
In his speech on 28 February 2013, Finance Minister Pravin Gordhan announced the following changes in terms of customs and excise duties and levies imposed in terms of the Customs and Excise Act 91 of 1964 (“Customs Act”):
- Tax incentives have been proposed for business in Special Economic Zones (SEZ’s), which may include Customs, although specific details have not been finalised as yet.
- In terms of tax administration, the budget speech and proposals contain further affirmation and commitment to South Africa’s participation in the ‘BRICS’ community (Brazil, Russia, India, China and South Africa).
- There is no mention made of the new draft Customs legislation which is due for promulgation. It had been anticipated that this may have been promulgated at the end of the calendar year 2012 and, to date, no further update as to the progress thereof has been communicated.
- The Minister has proposed the following changes with regards to the ‘sin taxes’
The excise duty liability on tobacco will increase by between 5.8% - 10% with cigarette and pipe tobaccos increasing by the highest margin. Excise duties on alcoholic beverages will increase by between 5.7-10%, with sparkling wine and spirits increasing by the highest percentages.
Changes in specific excise duties are as follows:
|Changes in specific excise duties 2013/2014|
|Product||Current rate of excise duty||Proposed excise duty rate||Increase|
|1||Malt beer||R59.36/litre of absolute alcohol (100.98c/average 340ml can)||R63.81/litre of absolute alcohol (108.48c/average 340ml can)||7.5%|
|2||Traditional African beer||7.82c/litre||7.82c/litre||0.0%|
|3||Traditional African beer||34.70c/kg||34.70c/kg||0.0%|
|7||Ciders and alcholic fruit bevarages||R2.97/litre (100.98c/average 340ml can)||R3.19/litre (108.48c/average 340ml can)||7.4%|
|8||Spirits||R111.64/litre of absolute alcohol (R36.00/750ml bottle)||R122.80/litre of absolute alcohol (R36.90/750ml bottle)||10.0%|
|9||Cigarettes||R10.32/20 cigarettes||R10.92/20 cigarettes||5.8%|
- This budget has placed more emphasis on environmental matters with the following changes to the environmental levies and taxes:
Certain products and the production thereof are ultimately harmful to the environment and it has been acknowledged that certain actions need to be taken either to mitigate these effects or to address them when they become apparent. In South Africa, there are a number of these taxes already in place. These include taxes on electric filament light bulbs, plastic bags, fuel, waste tyres, the production of electricity from non-renewable sources, air passenger taxes as well as a CO₂ emission levy on motor vehicles.
Carbon taxes have been on the table for some time. Until now it has been unclear whether the design of the appropriate model for carbon tax is to be in the form of a ‘carbon tax’, an ‘emissions trading scheme’, or a combination or hybrid of both.
In this budget, emphasis has been placed on energy-efficient savings. It is proposed that a basic tax-free threshold of 60% be provided to allow emission-intensive industries to engage in types of activities likely to set off their carbon tax liabilities. This threshold is proposed to run between 2015 and 2020.
The Minister has provided details regarding the structure and implementation of the carbon taxes. From 1 January 2015 it is proposed that a carbon tax at a rate of R120 per ton of CO₂ equivalent is implemented, increasing by 10% annually, during the first phase of implementation. A policy paper is to be published by Government by the end of next month. According to the proposals, there will be a period for public comment and consultation and we await the document with interest.
The revenues generated by these green taxes will reportedly be used to fund energy-efficiency savings tax incentives. It is then proposed that the electricity levy may then be phased out.
Vehicle emissions tax for relevant motor vehicles is being increased from R75 to R90 for every gram of emissions/km above 120g CO₂ /km. For double-cabs, this will be increased from R100 to R125 for every gram in excess of 175g CO₂ /km, with effect from 1 April 2013.
The levy on plastic shopping bags will increase to 6c/bag from 1 April 2013, from the 4c/bag that has been levied since 2009. From 1 April 2013, the levy on incandescent light bulbs will increase by R1 to R4 per bulb from the current rate of R3 per bulb, while fuel levies and Road Accident Fund levies will also increase by 22.5c/litre and 8c/litre respectively.
In line with the ‘green’ taxes focus, it is proposed to roll-out a biofuels production incentive with the objective to establish eight biofuels manufacturing plants. A fiscal incentive will be provided with the proposed cost being 3.5c/litre – 4c/litre of petrol or diesel. It is apparent that the cost will be financed through a levy included in the monthly price determination of petrol and diesel, however, the proposal is not clear as to whether this will be an additional levy or part of the existing fuel levy. We await policy documentation that we hope will clarify this.