The effect of carbon emissions
tax in the economy
National Treasury has proposed a carbon tax in South Africa in an effort to reduce carbon emissions by 34% by 2020. But Dr Philip Lloyd, Research Professor at the Energy Institute, Cape Peninsula University of Technology argues that a tax on carbon constitutes a tax on energy consumption, and that because energy consumption and economic development are directly correlated, a carbon tax on South Africa is in fact a tax on development, and should therefore be rejected.
Dr Lloyd also suggests that a trade off may exist between taxing carbon emissions and the country’s economic growth and employment goals. “The effects on GDP under the different non-closure and closure scenarios demonstrate that GDP declined by 0.5% and 13.9% for carbon taxes of R25 and R1000 respectively. Our emissions are almost exactly what would be expected from a nation at our stage of economic development. Reducing our carbon emissions might make us feel good, but having full employment would make us feel a whole lot better.”
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