A robust carbon tax keeps more revenue in South Africa and encourages local companies to reduce product emissions to improve competitiveness in international markets, and it aligns with international support for decarbonisation efforts here.
The carbon tax is an important economic instrument in South Africa. Yet it is now uncertain whether the country will continue with it.
Reports suggest that a proposal to suspend the tax may be heading to Cabinet. At the same time, the finance minister made no reference to such a move in the 25 February Budget speech. So, will it stay or will it go? For now, the picture is unclear – but what is clear is that scrapping the tax would be economically short-sighted and a step backwards.
This move against the carbon tax mirrors an attempt in December 2025 to change Eskom’s restructuring – namely the asset ownership of the transmission system operator, which would also have had negative economic implications. This was overturned by the President in the State of the Nation Address on 12 February.
The carbon tax in South Africa came into effect in 2019 and is underpinned by the Carbon Tax Act. It gives effect to the “polluter pays” principle by placing a value on a subset of greenhouse gas emissions that contribute to climate change. While the tax stems from environmental concerns, it has a range of important…