South Africa’s airline industry pleads for exemption from carbon tax

SOUTH AFRICA – South Africa’s airline industry has made a plea to the parliament to be exempted from the proposed carbon tax which aims to reduce emission of greenhouse gases.

The tax which is set to hit big energy users will not apply to international airlines as it covers economic activities which emit greenhouse gases within South Africa.

Airlines Association of Southern Africa chief executive Chris Zweigenthal said that the tax would impact on the competitiveness of domestic airlines, affecting their business operations.

He argued that failure to exempt airlines from the yet to be effective tax would reduce the return on investment for taxpayers from state-owned airlines SA Airways and SA Express and reduce the return on investment for local private sector airlines.

According to him, a carbon tax on the airline industry would curtail investment in new technology and cleaner equipment and have a limited impact if any, on the environment.

He said that a regulatory fragmentation between the South African and international regimes would increase the administrative burden for operators and governments and result in potential market distortions.

“The International Air Transport Association (IATA) is concerned that if domestic and international flights are subject to different regimes this will add to the administrative complexity and regulatory burden for airlines operating in SA.

The safe, orderly and efficient functioning of today’s air transport system relies on a high degree of uniformity in regulations, standards and procedures,” said Zweigenthal.

“In principle aviation does not support carbon taxes.

We believe that in a world where aviation is such an active facilitator of travel, communication and bringing people together, the introduction of carbon taxes is intended to discourage and effectively shrink air transport.

It is not only the airlines that have opposed the plans to enact the carbon tax, but also other big energy users such as mining companies, steel firms and state-owned power utility firms.

The new law proposes a tax rate of 120 rand ($10) per tonne of carbon dioxide equivalent and states that total tax-free allowances during the first phase until 2022 can be as high as 95%.

If the plea by energy firms is heard, South Africa’s parliament may postpone the enactment of the carbon tax, which has been delayed at least three times since it was first drafted in 2010.

The new law would affect about 1,000-1,500 companies and 75% of national emissions, according to a Reuters report.

South Africa has pledged to cut emissions by almost half by 2030.

The proposed tax has also elicited grave concerns from Association of Cementitious Material Producers and other major energy companies such as Sasol.

News Reporter

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