Carbon tax a burden to commercial property

Posted On Tuesday, 28 May 2013 07:00 Published by Commercial Property News
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Government's plan to implement carbon taxes from 2015 could contribute to the already high administered prices facing the commercial property industry.
Robbie Louw Promethium CarbonThe carbon tax has been flagged as a potential contributor to administered cost pressures. Electricity, rates and taxes increases well in excess of inflation have been identified as one of the industry's biggest challenges by property analysts and CEOs.

Robbie Louw, a director at carbon advisory firm Promethium Carbon, said last week the carbon tax liabilities of commercial property owners would be captured "largely in the electricity bills when Eskom passes through the tax they pay through to consumers".

The impact would be just below 5c/kWh, Mr Louw said. "The impact on the property owners will depend on how they handle the electricity cost in the lease agreements — I suspect they will pass the cost on to their tenants." In the case of property developers, Mr Louw said the carbon tax would "put pressure on building materials — especially cement".

"If we assume that the cement manufacturers pass through the carbon cost in full, the impact should be in the order of R1.50 to R3 per bag, depending on the grade of cement.

"The cost impact on other building materials will be less. The impact on the price of diesel will be about 12c/l."

South African Property Owners Association (Sapoa) president Estienne de Klerk said at the Sapoa convention earlier this month that "headwinds" facing the industry included above-inflation increases in electricity prices, rates and taxes, as well as skills shortages and the mooted carbon tax.

"The property industry has been investing in sustainable technologies — often without return, and this additional tax will ironically have an impact on our ability to improve our sustainability," Mr de Klerk said.

"I believe it is punitive on the industry and a deterrent to local and foreign investment."


Last modified on Tuesday, 28 May 2013 07:37

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