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Reducing Greenhouse Gas Emissions: Pricing Carbon, A Carbon Tax Option for South Africa?

Reducing Greenhouse Gas Emissions: Pricing Carbon,
A Carbon Tax Option for South Africa?
Presented by Cecil Morden, Chief Director, The National Treasury, South Africa
Venue: IMF HQ2 06B 606, HQ2 building (6th floor)
Wednesday, June 1, 12-1 pm

This presentation will provide a brief overview of a discussion document on carbon taxes published by the National Treasury in December 2010. This document follows on a draft policy paper on Environmental Fiscal Reform that was published in 2006. An electricity levy of 2c per kWh, (at the generation levy from non-renewable sources and nuclear) was introduced in South Africa in 2008 and a CO2 vehicle emission tax on passenger cars and double cab light commercial vehicles was introduced in September 2010 and March 2011 respectively. The talk will focus on the economic arguments is support of a carbon tax. If such a tax is introduced it might require the restructuring of the current taxes on liquid fuel and the electricity levy.

Defining an appropriate tax base and measures to mitigate the potential adverse impacts on low income households and on the trade competiveness of certain sectors are explored. The timing of the introduction of a carbon tax might be influenced by the outcome of the international negotiations on climate change.

Three design options are considered:

1. An emissions tax applied directly on measured carbon dioxide emissions;

2. An upstream tax on fossil fuel inputs based on the carbon content of the fuel (for example , coal); or

3. A downstream tax imposed on the outputs or products generated from fossil fuels (for example, electricity or liquid fuels).

Cecil Morden currently occupies the position of Chief Director Economic Tax Analysis at the National Treasury in South Africa, responsible for tax policy advice and tax revenue estimation. He joined in the National Treasury in May 2000 and has been involved in exploring environmental fiscal reform measures, the design of the mineral royalty regime, value added tax and excise duties. Cecil completed his undergraduate studies in Economics, Accountancy and Statistics, his honours degree in Economics and teachers diploma at the University of the Western Cape in Bellville (1975 to 1980). He completed his Masters degree in Economics at the University of Illinois, Urbana in the USA in 1988. He recently attended the Advanced Management Program (180) at the Harvard Business School, April - May 2011.

For further information on the presentation, contact Ian Parry, 202-623- 9724 or Alica, 202-623-4382.

The Joint Bank-Fund Brown-Bag Research Seminars on Environment and Energy is a joint initiative between the Development Research Group, Environment and Energy Team (DECEE), World Bank, and the Fiscal Affairs Department, IMF. Organizers of the series are Jon Strand (DECEE), and Ruud de Mooij and Ian Parry (FAD/IMF). The seminars are held on Wednesdays, at lunch time, typically once every two weeks, and alternately in the Bank and Fund. Aims of the seminars are to raise attention to, and interest, in environment and energy issues in both institutions; to promote the interaction between the two institutions in these fields; and to improve the institutions' common work on policy

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