Assessing the effectiveness of South Africa’s emissions based purchase tax for private passenger vehicles: a consumer choice modelling approach.
Keywords:emissions tax, passenger vehicles, discrete choice modelling
AbstractSouth Africa is an important economy in terms of global greenhouse gas emissions and it has made progressive policy steps to address its national emissions. One significant national fiscal policy is the emissions based purchase tax for private passenger vehicles, implemented in September 2010. There has, however, been little attempt to assess the effect that this key mitigation policy has had on the emissions of new passenger vehicle fleets. This study uses a discrete consumer choice model to assess the effectiveness of this tax policy in changing consumer behaviour and reducing fleet emissions. It finds that the emissions reduction achieved by the tax were negligible compared to the increases in fleet emissions associated with the growing vehicle market. It is demonstrated that the structure of the tax policy does not suit the dynamics of the South African vehicle market and the policy would require restructuring if it is to more effectively reduce fleet emissions. In addition, for the tax policy to effect significant fleet emissions reductions in the future it will require the emergence of low- and zero-carbon vehicle technologies in the lowest price brackets of the market, possibly via subsidy policies.
Ben-Akiva, M. E. and Lerman, S. R. 1985. Discrete choice analysis: Theory and application to travel demand. Cambridge, MA: MIT Press.
Burnkrant, R. E. and Cousineau, A. 1975. Informational and normative social influence in buyer behaviour. Journal of Consumer Research, 2(3): 206–215.
Department of Energy RSA. 2015. Fuel price archive [Online]. Available at: http://www.energy.gov.za/files/ petroleum_frame.html (Accessed: 03/07/15).
Department of Trade and Industry. 2013. Industrial Policy Action Plan 2013/14-2015/16 [Online]. Available at: http://www.thedti.gov.za/news2013/ ipap_2013-2016.pdf (Accessed: 12/07/16).
Douglas, M. and Isherwood, B. 1979. The world of goods: Towards an anthropology of consumption. London: Routledge.
Environmental Defense Fund. 2014. South Africa: An emissions trading case study [Online]. Available at: http://www.edf.org/sites/default/files/south-africa-case-study-may2015.pdf (Accessed: 19/06/15).
Geels, F. W. 2002. Technological transitions as evolutionary reconfiguration processes: a multi-level perspective and a case-study. Research Policy 31(8): 1257–1274.
Greene, D.L. 2011. Uncertainty, loss aversion, and markets for energy efficiency. Energy Economics 33(4): 608–616.
Grubb, M. 2014. Planetary economics. London: Routledge.
International Energy Agency (IEA). 2014a. CO2 emissions from fuel combustion highlights: 2014 Edition [Online]. Available at: https://www.iea.org/publications/freepublications/publication/CO2EmissionsFromFuelCombustionHighlights2014.pdf (Accessed: 14/04/15).
International Energy Agency (IEA). 2014b. Africa energy outlook: A focus on energy prospects in Sub-Saharan Africa [Online]. Available at: http://www.iea.org/publications/freepublications/publication/WEO2014_AfricaEnergyOutlook.pdf (Accessed: 14/04/15).
LightStone Auto. 2015. Lightstone Auto: Automotive market intelligence [Online]. Available at: http://www.lightstoneauto.co.za/ (Accessed: 20/04/15).
McFadden, D. 1980. Econometric models for probabilistic choice among products. Journal of Business 53(2): S13-S29.
McKinsey & Company. 2007. Curbing global energy-demand growth: The energy productivity opportunity [Online]. Available at: http://www.mckinsey.com/ ~/media/McKinsey/dotcom/Insights%20and%20pubs/MGI/Research/Resource%20Markets/Curbing%20global%20energy%20demand%20growth/MGI_Curbing_Global_Energy_Demand_full_report.ashx (Accessed: 27/04/15).
McShane, B. B., Bradlow, E. T. and Berger, J. 2012. Visual influence and social groups. Journal of Marketing Research 49(6): 854–871.
Mercure, J.-F. and Lam, A., 2015. The effectiveness of policy on consumer choices for private road passenger transport emissions reductions in six major economies. Environmental Research Letters 10 (064008).
Mercure, J.-F., Salas, P., Foley, A., Chewpreecha, U., Pollitt, H., Holden, P. B., and Edwards, N. R. 2014. The dynamics of technology diffusion and the impacts of climate policy instruments in the decarbonisation of the global electricity sector. Energy Policy 73: 686–700.
Merven, B., Stone, A., Hughes, A. and Cohen, B. 2012. Quantifying the energy needs of the transport sector for South Africa: A bottom-up model [Online]. Energy Research Centre, University of Cape Town. Available at: http://www.erc.uct.ac.za/Research/publications/12-Merven-etal_Quantifying_energy_needs_ transport%20sector.pdf (Accessed: 03/03/15).
National Association of Automobile Manufactures of South Africa (NAAMSA). 2010a. Fuel economy/Co2 labelling and taxation: South African motor industry experience [Online]. Available at: http://www.unep. org/transport/gfei/autotool/case_studies/africa/southafrica/NAAMSA%20labeling%20&%20taxation%20presentation%202010.pdf (Accessed 04/03/15).
National Association of Automobile Manufactures of South Africa (NAAMSA). 2010b. South African motor industry experience and new vehicle technology related fuel requirements [Online]. Available at: http://www.naamsa.co.za/papers/20100805/ (Accessed: 04/03/15).
National Association of Automobile Manufactures of South Africa (NAAMSA). 2014. Quarterly Review of Business Conditions: Motor Vehicle Manufacturing Industry / Automotive Sector: 3rd Quarter 2014 [Online]. Available at: http://www.naamsa.co.za/ papers/2014_3rdquarter/index.html (Accessed: 06/06/15).
Nel, R. and Nienarber, G. 2012. Tax design to reduce passenger vehicle CO2 emissions. Meditari Accountancy Research 20(1): 39-51.
Pilay, S. and Buys, P.W. 2013. Carbon tax pricing and the social cost of carbon: The case in the South African Motor vehicle manufacturing industry. Journal of Applied Business Research 29(6): 1751–1762.
Rajan, S. C. 2006. Climate change dilemma: technology, social change or both? An examination of long-term transport policy choices in the United States. Energy Policy 34(6): 664–679.
South African Petroleum Industry Association (SAPIA). 2012. South African petrol price composition. [Online]. Available at: http://www.sapia.co.za/_literature_146524/South_African_Petrol_Price_Composition (Accessed: 02/03/15).
South African Petroleum Industry Association (SAPIA). 2008. Petrol and diesel in South Africa and the impact on air quality. [Online]. Available at: http://www.sapia.co.za/LiteratureRetrieve.aspx?ID=43782 (Accessed: 02/03/15).
South African Revenue Service (SARS). 2014. Environmental levy on carbon dioxide emissions on new motor vehicles manufactured in South Africa [Online]. Available at: http://www.sars.gov.za/ AllDocs/OpsDocs/Policies/SE-EL-06%20-%20CO2%20on%20new%20Motor%20Vehicles%20Manufactured%20in%20South%20Africa%20-%20External%20Standard.pdf (Accessed: 02/03/15)
South African Revenue Service (SARS). 2016. Tariff Amendments 2016: Notice R401 [Online]. Available at: http://www.sars.gov.za/AllDocs/Embargo/ Tariffs/LAPD-LSec-CE-TA-2016-09%20-%20Notice%20R401%20GG39892%20Sch1P3D%201%20April%202016.pdf (Accessed: 011/07/16)
Todes, A. 2012. Urban growth and strategic spatial planning in Johannesburg, South Africa. Cities, 29(3): 158–165.
United Nations Environment Programme (UNEP). 2010. The South African developing automotive fuel economy policy [Online]. Available at: http://www.unep. org/transport/gfei/autotool/case_studies/africa/southafrica/cs_af_sa_0.asp (Accessed: 03/03/15).
World Bank. 2015. World DataBank: Inflation, consumer prices (annual %) [Online]. Available at: http://data.worldbank.org/indicator/FP.CPI.TOTL.ZG/countries/ZA?display=graph (Accessed: 10/05/15).
How to Cite
Copyright remains with the author(s).
Publishing rights remain with the author(s)
All articles published in JESA can be re-used under the following CC license: CC BY-SA Creative Commons Attribution-ShareAlike 4.0 International License.