Carbon tax to generate less revenue than expected – SSS



Although vehicle sales have remained robust in the recent past, it is expected that the new environmental tax, coupled with lower spending by consumers, will result in less than anticipated tax revenue. This, says Simonis Storm Securities, will eventually result in the new tax being passed on to consumers.

On July 11 the Ministry of Finance’s previously announced carbon emission tax came into effect. The new tax is only applicable to certain vehicles, most notably passenger vehicles, sport utility vehicles (SUVs) and double cab vehicles with gross vehicle mass (GVM) not exceeding 5 tonnes. Motorcycles, trucks and buses will not be subject to the duties. The tax is N$40 per gram of carbon dioxide/km emission exceeding 140g.


Global professional services firm Ernst & Young Namibia (E&Y) in its tax bulletin in April said amendments to the Customs and Excise Act 20 of 1998 were gazetted on May 30 to introduce the long-awaited environmental taxes from this date. The environmental taxes introduced include the imposition of an environmental duty on certain disposable goods and carbon dioxide emissions of specified vehicles.

It said the object of the environmental duties are to contribute to a green economy and sustainable development objectives; serve as an incentive for behavioural change towards the use of environmental friendly alternatives; and contribute to the Ministry of Finance’s revenue-raising objectives. The environmental duties will be administered as a domestic excise tax and will be collected when the specified goods are imported or when the goods are manufactured in Namibia.

E&Y also provided a breakdown of how levies will be introduced under specific environmental duties on carbon dioxide emission. The levies will also be imposed on lamps and tyres. The rate of environmental duty per lamp (amongst others, for electric filament lamps or tungsten halogen lamps of 15 watts (W) or more but not exceeding 1 000W and for a voltage (V) exceeding 100 V, but not exceeding 260V, excluding those for use solely or principally with motor vehicles) will be N$3 per lamp.

Levies on all new pneumatic tyres will be N$10 per tyre. The rate for motor cars and vehicles principally designed for the transfer of persons (excluding vehicles for the transport of 10 or more persons including the driver, as well as hearses, emergency vehicles and diplomatic vehicles) is estimated at N$40 per gram/kilometre for CO2 emissions exceeding 120 grams/km.


Meanwhile, as the effects of the new carbon tax legislation are only beginning to be felt, total vehicle sales increased slightly by 3.5 percent month-on-month (m-o-m) to 1 589 in June 2016. This is the highest in seven months when 1 721 units were recorded in November 2015.

It is interesting to note that the Toyota and Volkswagen brand accounts for over half of total vehicle sales, of which the Toyota Hilux accounts for 22.1 percent. The National Association of Automobile Manufacturers of South Africa (NAAMSA) released Namibia’s new vehicle sales statistics for the month of June 2016 late last week. On an annual basis, total vehicle sales contracted by 13.8 percent year-on-year (y-o-y), compared to a -4.2 percent registered in the prior year.

Local stock brokerage, SSS, ascribes the monthly upsurge in vehicle sales to an increase in number of units sold of light commercial vehicles (6.7 percent m-o-m), medium commercial vehicles (36.8 percent m-o-m), heavy commercial vehicles (14.3 percent m-o-m) and extra heavy vehicles (66.7 percent). In contrast, passenger vehicles continue to decline by -3.9 percent m-o-m.

SSS expects light commercial vehicles, which account for 54.8 percent of total new vehicle sales, to continue being the main driver in the number of new vehicles sales.

“With the exception of passenger vehicle sales, all categories attributed positively towards the monthly growth in total vehicle sales. Light commercial vehicles increase by 6.7 percent m-o-m to 870 units, albeit at a slower pace compared to a 10.1 percent recorded in the prior month. Medium commercial vehicles and extra heavy vehicles grew by 36.8 percent m-o-m to 26 units and 66.7 percent m-o-m to 40 units, respectively, during June 2016.

In its latest report, SSS pointed out that the suggested aggregate value of new vehicle sales stood at N$6.3 billion during June 2016 compared to N$5.7 billion recorded in the prior month. This is the highest value recorded since a N$6.3 billion was recorded in September 2015.

“The 10.5 percent m-o-m growth in the value of new vehicle sales can be attributed to an increase in the medium commercial and extra heavy commercial vehicles, which account
for 85.7 percent or N$5.4 billion of the total value in June 2016. Furthermore, we believe that the 2.0 percent increase in the cost of vehicles sold during June 2016 has partially contributed to the increase in the value of new vehicle sales,” read the SSS report.
– Additional reporting by Nampa


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