Zambia proposes a review of its carbon tax to promote cleaner vehicles

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A national dissemination workshop to discuss the key findings of a fuel economy study in Zambia took place in November 2018 in Lusaka, Zambia. The workshop was organized by the Zambian Environmental Management Agency with participants drawn from various government ministries, fuel and vehicle industry, the academia and the media. Also in attendance were representative of UN Environment and the University of Nairobi to provide regional and international experiences in promoting vehicle fuel economy. 

Zambia is one of the nine African countries being supported by the Global Fuel Economy Initiative with funding from the FIA Foundation to analyse the fuel economy of their vehicle fleet. Fuel economy baseline studies are key in supporting policymaking processes to promote more fuel-efficient vehicle importation. 

In his opening remarks, Director General of the Zambia Environmental Management Agency John Msimuko noted that this was the first time such a study was taking place in Zambia and thanked GFEI partner UN Environment for facilitating the study. He noted that Zambia would continue to collect fuel economy information moving forward to support policymaking. The local consultants that had been engaged by the Zambia Environmental Management Agency to support the fuel economy baseline analysis - GP environmental consultants - took participants through the findings, revealing that 73 per cent of vehicles imported into Zambia were used vehicles and older than five years. 

Zambia’s vehicle taxation mechanism showed that the government had already introduced two tax systems to incentivize import of cleaner vehicles. Vehicles more than five years were required to pay a one-off flat tax called the Motor Vehicle Surtax. This tax is added to import duty. In addition, an annual charge on emissions, called the Carbon Emissions Surcharge, is applied on all vehicles based on their engine displacement. However, from the fuel economy study, the two tax systems were not effective in promoting a shift to cleaner vehicles. A revision of both taxes was proposed to encourage import of cleaner, more fuel-efficient vehicles.

The need to promote clean mobility in Zambia was evident owing to the fact that 93 per cent of the country’s electricity is renewable. This presented an opportunity for mobility powered by renewable energy, including electric mobility. The government has already zero-rated excise duty for electric vehicles and halved their customs duty. Despite this effort, there are no electric vehicles registered in the country. In response to the findings and discussions, participants recommended a modification of the taxation system to a feebate-type structure. They also called for eco-labelling and enhanced public awareness to support a shift to cleaner vehicles, including electric vehicles.