IDEAS home Printed from https://ideas.repec.org/a/sae/engenv/v24y2013i6p917-938.html
   My bibliography  Save this article

The Impact of a Multilateral Electricity Generation Tax on Competitiveness in Southern Africa: A Computable General Equilibrium Analysis Using the Global Trade Analysis Project

Author

Listed:
  • R. Seymore
  • J. H. van Heerden
  • M. Mabugu

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. 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. It is shown that an electricity generation tax will indeed affect the competitiveness of South Africa in a negative way. Furthermore, SACU and SADC wide implementation will marginally reinforce these negative effects. However, a multilateral electricity generation tax across SACU or SADC countries will result in emission reductions, but lower than in the case of a unilateral electricity generation tax. In contrast, the cost to the South African economy could be limited, if the European Union would follow suit and implement an electricity generation tax. One could therefore argue in favour of global rules for environmental taxes, since this will ensure minimum negative competitiveness effects on participating countries.

Suggested Citation

  • R. Seymore & J. H. van Heerden & M. Mabugu, 2013. "The Impact of a Multilateral Electricity Generation Tax on Competitiveness in Southern Africa: A Computable General Equilibrium Analysis Using the Global Trade Analysis Project," Energy & Environment, , vol. 24(6), pages 917-938, October.
  • Handle: RePEc:sae:engenv:v:24:y:2013:i:6:p:917-938
    as

    Download full text from publisher

    File URL: http://eae.sagepub.com/content/24/6/917.abstract
    Download Restriction: no

    More about this item

    Keywords

    GTAP; competitiveness; electricity tax;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:engenv:v:24:y:2013:i:6:p:917-938. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (SAGE Publications). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.