CO2 car tax hits motorists

Johannesburg - People will be paying significantly more for new cars from Wednesday.

The new "green" tax, which applies to new passenger vehicles which release more than 120g of carbon dioxide (CO2) per kilometre, comes into effect on Wednesday.

For each extra gram of CO2/km, the car's price increases by R85.50 (R75 plus VAT).

According to the National Association of Automobile Manufacturers of South Africa (Naamsa) this will bring about an average price increase of 2.5%.

The national treasury said the environmental tax is based on the "polluter pays principle" and is intended to change consumer behaviour.

For this reason the treasury and industry will recommend that dealers indicate the CO2 tax separately on invoices.

Industry response

It is still unclear whether consumers will have to pay the full amount or whether car manufacturers or dealers will absorb part of it.

"The tax will be transferred to the consumer," Gary Ronald, spokesperson for the Automobile Association (AA) said on Tuesday.

Leo Kok, spokesperson for Toyota South Africa, said they are currently looking at ways of lessening the burden on the consumer.

Toyota wants to try to absorb part of the tax, especially in cases where people buy more environmentally friendly cars.

Guy Kilfoil, head of communication at BMW South Africa, earlier told Sake24 that, due to the competitive nature of the market, manufacturers can't transfer the increased sales prices to consumers, because they will be "pricing themselves out of the market".

According to Kok, South Africa's fuel is not yet clean enough to be used in highly environmentally friendly cars.

Corollas which comply with strict European (Euro 5) standards are manufactured at Toyota's plant in Durban, but they are exported.

These cars' engines cannot function optimally with the sulphur content of our fuel, he explained.

Impact

It is difficult to say at this stage what impact the tax will have, Ronald said.

According to him, it might have an impact on the type of vehicle people are going to buy, because they might not be able to afford what they want.

"But I don't think the impact will be significant."

CO2 tax on double-cab vehicles will only come into effect in March next year in order to give manufacturers and importers time to determine their CO2 emissions.

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