Premier cautiously welcomes renewable energy tax incentives

Joint media release: Premier cautiously welcomes tax incentives for businesses & individuals announced in Budget 2023 to help ease energy crisis

Premier Alan Winde cautiously welcomed  Finance Minister Enoch Godongwana’s announcement in his budget speech of tax interventions to encourage businesses and households to turn to renewable energy sources to bolster renewable power production and ease the energy crisis.

In his speech the Minister outlined two measures:

• From 1 March 2023, businesses will be able to reduce their taxable income by 125 percent of the cost of an investment in renewables. There will be no thresholds on the size of the projects that qualify, and the incentive will be available for two years to stimulate investment in the short term.
• Individuals who install rooftop solar panels from 1 March 2023 will be able to claim a rebate of 25 percent of the cost of the panels, up to a maximum of R15 000. This will only be offered for 1 year.

The Premier pointed out, “This is partly in line with what the Western Cape Government had called for, but we should have gone further, especially for individuals whose daily lives have been significantly disrupted by relentless rolling blackouts.”

Premier Winde, however, believes, “The tax incentive for individuals does not go far enough. The rebate should be higher and should run over a longer period. The energy crisis will be with us for much longer than a year and if we are to sustain our country’s just energy transition, we must demonstrate a definitive commitment to renewable energy. The lack of a clear plan to achieve long-term energy resilience remains a deep concern for us.”

He added, “I am encouraged by the Minister acknowledging that the energy crisis is the country’s biggest economic constraint and that nothing can happen to stimulate economic growth without significant work to resolve this catastrophe. The Western Cape will be pushing harder for more residents to consider renewable energy and for the province to become independent of Eskom.”

Western Cape Minister of Finance and Economic Opportunities, Mireille Wenger, said, “While we welcome the much-needed interventions to enable renewable power generation by citizens in South Africa, I remain concerned that provincial allocations through the Provincial Equitable Share are well below inflation. This means more pressure on critical frontline services, such as health, education, and social development.”

Minister Wenger continued, “The fact that South Africa’s debt-servicing costs will increase by 8.9% over the medium-term, while allocations to provinces will only increase by 2.8% over this same time, demonstrates the serious consequences of years of mismanagement and corruption.”

Minister Wenger said she was hoping to hear concrete plans on VISA reform, which is severely impeding investment in South Africa. “The note that South Africa is working to address the VISA backlog is welcomed, but we now need to match our words with action. A clear deadline is needed for introducing a remote working VISA, with significant reform of the VISA system required.”