The taxman hauls out another heavy stick

Gareth Stokes, FAnews Online Editor

The ticket price on your new car just shot up a little

The National Treasury recently announced a green tax (or CO2 emissions tax) on all new passenger vehicles. A couple of weeks ago they announced – apparently unexpectedly – this tax would apply to new light commercial vehicles too. McCarthy chief executive Brand Pretorius says South Africa’s decision to impose this tax on light commercial vehicles is unique – and he might’ve added very sneaky! The tax will be collected and paid over to the South African Revenue Services (SARS) by the motor vehicle manufacturer (or importer) from 1 September 2010.

Government is selling this tax first as a “green” tax – and second as a tax on the wealthy. But the reality is the CO2 emission standards are set so tight they “catch” almost every vehicle offered for sale in the country today. It’s going to cost a packet too. The tax will initially be levied at R75 per g/km on vehicles emitting more than 120g/km CO2. At this rate it’s likely to add between R10 000 and R20 000 to the sticker price of your new vehicle. And – after some time – you won’t even know you’re paying it…

I paged through a few pages of the latest car magazine to get a feel for things. A new Mercedes C220 Blue Efficiency comes in at around 192g/km CO2 – which means the “green” tax on this vehicle totals R5 400. A BMW 335i, with 277g/km CO2, would run you closer to R11 775. If you prefer a Toyota Hilux Double Cab you’re going to have to tread carefully. The 4.0l V6 Raider produces 350g/kgm CO2 and will secure R17 250 for the greens... I was chuckling at the extra tax for those wealthy enough to afford a new car when this horror story landed in my inbox…

Second hand cars will pay the tax too...

Moves are afoot to extend the vehicle emissions tax on new cars to all vehicles on South Africa’s roads. Unfortunately this isn’t an April Fools’ prank; but official government policy. The minister of finance, Pravin Gordhan, indicated on Tuesday, 24 August 2010, his intention to include such taxes in the Taxation Laws Amendment Bill. At least that’s what he told the national assembly. The idea is to consolidate this tax with the existing annual license fee currently levied on all licensed vehicles. If you thought you’d already paid for the Gautrain, Gordhan’s reasoning might cause you to think again. Apparently higher fuel levies and more expensive fuels are justified because of recent improvements in public transport...

Government – the same lot who recently approved two massive coal-fired power plants for Eskom – is flogging the “green” card for all its worth. “There is a place for all these mechanisms if we want to reduce the emission of greenhouse gases and ensure we leave our children with a better legacy,” preached Gordhan, especially “when it comes to air quality and reducing the risks of climate change.”

Save money in a smaller car – not likely!

Are there any cars that fall under this “green” tax radar? The Toyota Prius creeps in at 115g/km CO2… And that’s where it ends! A Peugeot 107 almost makes the cut with 129g/km, the Daihatsu Charade manages 140g/km, a Mazda 2 gets you down to 165g/km and a Fiat Panda 1.2 boasts 157g/km. But I don’t see too many financial services professionals making sales calls in these vehicles.

As you reach into your pocket for the extra wad you might want to shed a tear for the poor Lamborghini driver. The published CO2 number for the Murcielago flagship is a whopping 583g/km – which translates into a “green” tax of some R35 000. Then again, if you can pay R3 million plus for your wheels you deserve whatever tax government can throw at you...

Editor’s thoughts: Another day another tax in South Africa. My problem with this kind of tax is it lacks transparency. First – the motor manufactures who pay it over are bound to inflate the price when they on-sell the vehicle. Second – the manufactures pay the tax based on their estimates of CO2 emissions, allowing them to pull the wool over government’s eyes. And third – there’s no guarantee the tax gets applied for its goal of reducing greenhouse gas emissions. Do you think government is playing “fair” by introducing yet another tax? Add your comment below, or send it to gareth@fanews.co.za