Article

The South African carbon tax, implemented in 2019, faces potential suspension as reports emerge of a proposal heading to Cabinet. This tax is essential for retaining revenue and encouraging local companies to reduce emissions, thereby enhancing international competitiveness.

Current exemptions result in minimal revenue collection, with an estimated R57.2 billion forgone in 2025. The tax also supports compliance with the EU's Carbon Border Adjustment Mechanism, reinforcing the need for South African exporters to demonstrate carbon pricing equivalence.

Suspending the tax could jeopardize international decarbonisation support and investor confidence. The government needs to act to maintain the tax and its economic benefits.