The outbreak of the Covid-19 pandemic has resulted in an unprecedented health and economic crisis. Countries have announced economic stimulus packages and policy measures to limit damage to economies and to ensure that economies recover swiftly.
The pandemic has also highlighted the extreme inequality experienced in most countries, with vulnerable communities suffering the most, especially economically. Globally and nationally, people are calling for a new green deal and a fundamental change in the economy to create greater equality and a sustainable and resilient future.
South Africa’s diverse landscapes offer opportunities to achieve just that. And the effective implementation of innovative finance solutions can assist in attaining this new green deal recovery. Sustainable landscape finance is critical to ensuring the endurance and effectiveness of natural wealth which underpins human health and well-being as well as sustainable economic recovery and economic growth as evidence during this global crisis.
Section 37D of the Income Tax Act No. 58 of 1962 (the ITA), is a globally unique biodiversity tax incentive that provides an extraordinary tax deduction to South Africa’s protected areas, bringing crucial financial sustainability to these areas and their stakeholders.
Now more than ever, tax savings and tax efficiency are vital to financial emergency measures in response to the crisis. Tax efficiency assists in cost cutting, effective resource allocation and alleviates financial burdens for struggling businesses.
This is of particular importance for many protected areas reliant on eco-tourism income, which has stalled due to the global halt in tourism. Section 37D helps in building an enabling environment for reaching some of South Africa’s National Development Plan 2030 Goals, the most important of which is to eliminate poverty and reduce inequality, key areas highlighted by the Covid-19 pandemic.
The innovation for this tax incentive arose out of the Fiscal Benefits Project, originally funded by the WWF Nedbank Green Trust and mainstreamed through funding from the Biodiversity and Land Use Project and implemented by Wilderness Foundation Africa in collaboration with BirdLife South Africa.