The competitiveness effect of a multilateral electricity generation tax

Show simple item record

dc.contributor.upauthor Chitiga-Mabugu, Margaret
dc.contributor.upauthor Van Heerden, J.H. (Jan Horn), 1957-
dc.contributor.upauthor Seymore, Reyno
dc.date.accessioned 2010-02-17T06:26:37Z
dc.date.available 2010-02-17T06:26:37Z
dc.date.issued 2009-08
dc.description.abstract The South African Government announced, in the 2008 Budget Review, the intention to tax the generation of electricity from non-renewable sources with 2c/kWh. This tax is to be collected by the producers/generators of electricity at the source. The intention of the tax is to serve a dual purpose of managing the potential electricity shortages in South Africa and to protect the environment. The primary objective of this paper is to evaluate the impact of an electricity generation tax on the international competitiveness of South Africa. Specifically, different scenarios are assessed to establish whether the loss of competitiveness can be negated through an international, multilateral electricity generation tax. The paper firstly considers the beneficial impact of environmental taxation on the competitiveness of a country. We subsequently apply the Global Trade Analysis Project (GTAP) model to evaluate the impact of an electricity generation tax on the competitiveness of South Africa, given multilateral taxes on SACU, SADC and European Union economies. We simulate the proposed tax as a 10 percent increase in the output price of electricity. We assume a closure rule that allows unskilled labour to migrate between sectors and a limited skilled workforce. As expected, a unilateral electricity generation tax in South Africa will adversely affect the competitiveness of the South African economy and slightly improve the competitiveness of the other SACU and SADC economies. However, if a multilateral tax is imposed throughout the SACU and SADC countries, South Africa will experience a marginally greater loss of competitiveness compared to a unilateral tax. At the same time the rest of the SACU and SADC countries will experience a loss of competitiveness. The benefit of emission reduction in South Africa will also be lower under these multilateral tax scenarios. The competitiveness effect on the South African economy as well as emission reduction will be more moderate under a multilateral South Africa/EU electricity generation tax than under a unilateral South African tax. en
dc.identifier.citation Seymore, R, Mabugu, M & Van Heerden, J 2009, 'The competitiveness effect of a multilateral electricity generation tax', University of Pretoria, Department of Economics, Working paper series, no. 2009-19. [http://web.up.ac.za/default.asp?ipkCategoryID=736&sub=1&parentid=677&subid=729&ipklookid=3] en
dc.identifier.uri http://hdl.handle.net/2263/13099
dc.language.iso en en_US
dc.publisher University of Pretoria, Department of Economics en_US
dc.relation.ispartofseries Working Paper (University of Pretoria, Department of Economics) en_US
dc.relation.ispartofseries 2009-19 en_US
dc.rights University of Pretoria, Department of Economics en_US
dc.subject Competitiveness en
dc.subject Global Trade Analysis Project (GTAP) model en
dc.subject Electricity generation tax en
dc.subject.lcsh Electric power production -- Taxation -- South Africa en
dc.subject.lcsh Competition, International en
dc.subject.lcsh Electric power distribution -- South Africa -- Management en
dc.title The competitiveness effect of a multilateral electricity generation tax en
dc.type Working Paper en


Files in this item

This item appears in the following Collection(s)

Show simple item record