New transport regulations and carbon taxes and their effect on industry and economy
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A presentation by Mr Mike Shussler (Economist), at the Transport Forum SIG: "Sustainable Transport" on 6 August 2015 hosted by University of Johannesburg's Institute of Transport and Logistics Studies (Africa), or ITLS (Africa). The theme of the presentation was: "New Transport Regulations and Carbon Taxes and their Effect on Industry and Economy".
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New transport regulations and carbon taxes and their effect on industry and economy
- 1. The sceptical optimist: – Mike Schussler Economists.co.za www.economists.co.za 1
- 2. Where are SA taxes in theWorld. Background to the debate on Carbon Carbon tax and the its costs New regulations add a further burden for road freight. Current conditions in the land transport arena. A new trucking index from economists dotcoza Thanks 2www.Economists.co.za
- 3. Simple and where we think budget takes us.
- 4. 4Economists Dotcoza Japan 9.8Egypt 14.8Mauritius 18.7Ireland 23.3 United States 10.0Malaysia 14.8Slovenia 18.8Angola 24.0 China 10.2Peru 15.0Kenya 18.8Morocco 24.4 India 10.4Brazil 15.6Austria 19.2Belgium 25.0 Spain 10.7Korea, Rep. 15.7Turkey 19.4Luxembourg 25.1 Germany 11.6Tanzania 16.3 European Union 19.6Botswana 25.7 Philippines 12.9Zambia 17.0Finland 20.7 United Kingdom 27.0 Uganda 13.0Poland 17.2Portugal 20.9South Africa 27.0 Middle income 13.3 Mozambiqu e 17.6France 21.5Norway 27.8 Ghana 13.6Euro area 17.9Sweden 22.0New Zealand 30.4 World 14.4Chile 18.3Italy 22.7Denmark 34.0 8/7/2015 SA has a very high tax to GDP Ratio and that is not just a function of inequality but also from high taxation levels
- 5. 0 5 10 15 20 25 30 SlovakRepublic CzechRepublic Korea Turkey Poland Estonia Hungary Israel Japan Slovenia Portugal Greece Spain Netherlands France Luxembourg Switzerland OECD-Average Ireland UnitedKingdom UnitedStates SouthAfrica Germany Austria Norway Australia Canada Italy Sweden Belgium NewZealand Finland Iceland Denmark This includes taxes on capital gains paid by individuals but excludes direct property taxes such as rates. Est from 9,3% to 9,7% in 2015/16 in new budget. Takes us close to
- 6. 0 2 4 6 8 10 12 Greece Slovenia Hungary Estonia Germany Iceland Netherlands Spain Turkey Finland Poland Austria Ireland SlovakRepublic France UnitedStates Sweden Israel Portugal UnitedKingdom Italy Switzerland Canada OECD-Average Belgium Denmark CzechRepublic Japan Korea NewZealand SouthAfrica Australia Luxembourg Norway All others remaining the same SA is going to have the 2nd highest corporate taxes to GDP in the world (outside of gambling and royalties. As we head from 5% to 5,5,7% of GDP. We were often the highest here.
- 8. 0 2 4 6 8 10 12 14 16 18 Australia NewZealand Denmark SouthAfrica Chile Mexico Iceland Ireland Canada Israel UnitedStates Korea UnitedKingdom Switzerland Turkey Portugal OECD-Average Norway Sweden Greece Estonia Luxembourg SAwithprivate Spain Poland Japan SlovakRepublic Hungary Finland Italy Germany Belgium Austria CzechRepublic Slovenia Netherlands France SA like some other countries has private social security in the form of pensions and medical insurance. Private pension contributions make up about 5,7% of GDP and Medical Insurance makes up 4.2% of GDP. Nonetheless this is committed money much like tax.
- 9. 4 6 8 10 12 14 16 18 Japan Korea CzechRepublic Switzerland Germany Chile SlovakRepublic Luxembourg Turkey Mexico Netherlands NewZealand Hungary Italy UnitedStates UnitedKingdom Poland Israel Estonia Austria Spain Ireland Portugal Canada Belgium Greece Slovenia Sweden SouthAfrica France Norway Finland Denmark This data is for 2012. Since then our compensation as % of GDP has risen and if other countries did not change much we could already be in second place.
- 10. We do have other revenue which often acts like a tax such as water and light margins. (Plus keep in mind they are most likely from a SOE which charges more than it should to do social things such as BEE shopping.) www.Economists.co.za 10
- 12. SA also pays “tax” via water and lights as well as sewage and property taxes. About 5% of GDP for local government revenue other than property taxes but not included in government revenue. Another 1% in property taxes which is normal included in general government tax revenue. Over 1% of revenue is paid to SACU. Other things such as sales of assets; fines; interest earned etc. are also included.
- 13. Remember too that SA has no natural river transport and relies on rail and road for all inland transport and both are carbon intensive and both are expensive. Furthermore SA has very high logistics costs such as Portnet fees which are not included in previous government revenue figures. www.Economists.co.za 13
- 14. According to the RFA, at a rate of R75 per ton the carbon tax is likely to be in the region of 1.4% of GDP, increasing to 4.6% of GDP at a rate of R250 per ton. This would result in one of the biggest tax rate increases (approx 5% at the lower R75 rate) in SouthAfrican history. Other than the three big taxes being personal income taxes, company taxes andValue-AddedTax (“VAT”), the only other tax likely to be bigger – at least at the lower carbon tax rate – is fuel tax. ▪ Will be via fuel tax increase and higher fuel prices for increased power costs 14www.Economists.co.za
- 15. A carbon tax based on fuel tax on both petrol and diesel, on average, would amount to as much as 16c/l at a carbon tax rate of R75 per ton, at the current rates of fuel consumption in the country. The aforementioned increases to 52c/l, if the rate increases to R250 per ton. This include carbon tax on fuels and cost increases over time from refineries using electricity from coal The carbon tax at the aforementioned rates will have a negative impact on economic growth. 15www.Economists.co.za
- 16. Why coal-fired power stations are still being commissioned if Government is genuinely trying to create carbon efficiency. Indirect users such as road freight and Transnet Rail cannot get any incentives for GHC savings and they have little influence. This will be passed on over time to consumers and make SA logistics costs even higher. 16www.Economists.co.za
- 17. Regulations to take trucks off our roads for six hours a day are going to add further costs on an industry with a 4% profit margin. This takes 25% of a day away but many firms work only 12 to 15 hours so the actual productivity loss could be up to 50%. What this will do is enforce more trucks and drivers on an industry already struggling. This will increase the 7% that land transport already costs this country. 17www.Economists.co.za