As part of environmental fiscal reform initiatives the South African government proposed, inter alia, increases in vehicle customs and excise duties (ad valorem) and the licensing fees of fuel-inefficient vehicles. Consequently it is proposed that the existing ad valorem excise duties on motor vehicles be adjusted to incorporate carbon dioxide (CO2) emissions as an environmental criterion from 1 March 2010. The purpose of these proposed vehicle green taxes is to discourage the acquisition and use of vehicles with higher carbon dioxide emissions and fuel-inefficient vehicles. The prospects of it achieving the aforementioned purpose could however be affected by the design of the proposed vehicle green taxes and the provisions of the Income Tax Act 58 of 1962. An extended literature review (non-empirical study) was performed. Literature on studies in Japan, European Union countries and fiscal reform instruments implemented in United States were reviewed. Certain weaknesses in, and alternatives for, the proposed vehicle green taxes were noted. The focus on consumers is probably the most important weakness which could be addressed by the implementation of a “feebate” policy (with the focus on vehicle manufacturers and “fuel economy technology”). Based on the findings of this study it is also apparent that certain provisions of the Income Tax Act 58 of 1962 do allow for a tax deduction if the proposed vehicle green taxes are incurred (depending on the category of the taxpayer). The possible tax deduction could impair the ability of the proposed vehicle green taxes affecting purchasing and usage behaviour. As section 23(d), of Income Tax Act 58 of 1962, currently does not prohibit these deductions possible amendments thereto should also be considered. Copyright
Dissertation (MCom)--University of Pretoria, 2010.