The case against a carbon tax for South Africa

Abstract

Treasury has made a proposal that there should be a carbon tax in South Africa. In its discussion paper, the rationale for the tax is given as "Climate change and its effects are the result of GHG emissions, which are not paid for by the emitters. Such emissions impose external costs on society – an "externality" in economic terms. Because these costs have not been factored into the prices of goods and services, this is a "market failure", which can be corrected by a pricing instrument." But greenhouse gas [GHG] emissions are global, and the South African contribution is minor.