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Sin tax and fuel: How you can get R220 000 back in your pocket by ditching bad habits

In terms of smoking and added sin tax, a person who smokes a pack of 20 a day could save R18 000 a year and have more than R220 000 back in their bank account in 10 years’ time. File Image: IOL

In terms of smoking and added sin tax, a person who smokes a pack of 20 a day could save R18 000 a year and have more than R220 000 back in their bank account in 10 years’ time. File Image: IOL

Published Feb 24, 2022

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In the recent budget speech, Finance Minister Enoch Godongwana announced a 4.5% to 6.5% increase on excise duties. Often referred to as ‘sin tax’, excise duties affects high-volume daily consumable products like tobacco, alcohol and sugary beverages.

Sin tax: ditch one and save R18 000 a year

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According to the World Health Organisation, products subjected to sin tax can be detrimental to one’s health. If that isn’t enough of a deterrent to quit or cut-down, maybe the major money saving benefits will be.

“From a health perspective, one study suggests that if people respond positively to these increases and cut their sugary beverage consumption, for example, by about 20%, the health benefits would be the same as writing them a cheque for R1500 to R4500 each year. From a budget perspective, if you cut out smoking completely, you could save about R18 000 a year,” says Susan Steward, spokesperson for Budget insurance.

But here’s where things get really interesting. Place this annual saving of R18 000 into a savings account with 4% annual return, and you’ll be rewarded with a nice nest egg of R220 915 in 10 years. If you increase your contribution by 5% each year – money you likely would have paid on annual excise duties anyway – that amount grows to R273 439.

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Fuel: brace yourself - increases are still on the cards

To provide some relief to households, Minister Godongwana announced that the general fuel levy on petrol and diesel for 2022/23 will not be increased. There will also be no increase in the Road Accident Fund levy.

“While this is comforting and will cushion the upcoming March petrol price hike blow, there is still an increase looming,” says Steward.

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“The good news is that, with a few minor adjustments to your driving habits and with regular car maintenance, you can boost the fuel efficiency of your car by as much as 40%. So, if you have a 60 litre tank, and fill up with petrol, 48 times a year at the current rate of R19.89 per litre, a 40% reduction in fuel consumption could save you about R22 000 a year. If fuel is increased by, say, R1 in March 2022, a 40% reduction could save you R24 000 a year.

Budget Insurance provides the following tips for better fuel economy:

Service smart: A car can burn up to 30% more fuel if proper maintenance is not performed on a regular schedule. With this in mind, make sure that your car is serviced regularly. Things like worn spark plugs, worn rings, faulty injectors, sticky brakes, low coolant levels, dirty oil, and dirty filters all add up to engine inefficiency, which leads to increased fuel consumption.

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Wheel wise: Check your car’s wheel alignment. Bad wheel alignment causes more friction, which takes more power to overcome and results in higher fuel consumption.

Pressure check: Check for underinflated tyres, as these, too, increase resistance.

Air con costs a cool buck: Use the air conditioning only when really necessary, as it places additional load on the engine.

Dead weight: Reduce the vehicle’s weight by removing unnecessary items from it and, if you mostly do city driving, consider driving with only half a tank of fuel.

Nice and slow: Don’t speed. The gas-guzzling effects of “stepping on it” are well-known.

Don’t stop-start: Maintain momentum as far as possible by looking and planning ahead, flowing with traffic and timing your approaches to hills, traffic lights and crossings better.

Geared for efficiency: Drive at the lowest speed in the highest gear that the road and traffic conditions allow, without labouring the engine.

Tech savvy: Many vehicles have economy settings to optimise performance, throttle response, ride height etc. for maximum fuel efficiency. Use them to your advantage.

Plan ahead: Do several tasks on one round trip, as opposed to many shorter ones. This not only limits mileage and the amount of time it takes to get your chores done, but also keeps your vehicle’s engine running at optimal temperature.

Wait out the rush: Battling through traffic not only increases fuel consumption, but also wear and tear on your vehicle’s transmission and brakes.

Steward says: “Saving on fuel by keeping your vehicle in shape and changing the way you drive may seem like a bit of a hassle, but if you increase your fuel economy by 40%, a tank that normally gets you 700 km could get you close to 1000 km. This translates to almost a tankful of savings for every two times you fill up.”

BUSINESS REPORT

Related Topics:

BudgetTax

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