#Budget2019: Motorists will be hit hardest from Budget Speech
Business / 21 February 2019, 10:27am / Mercury Reporters
DURBAN - South African motorists will be hardest hit by Finance Minister Tito Mboweni’s 2019 Budget speech as they brace themselves for an increase in the fuel price levy, the Road Accident Fund levy and a new carbon fuel levy.
In addition, a petrol price increase is looming. The fuel levy for petrol and diesel went up by 29 cents and 30 cents respectively and the Road Accident Fund levy goes up by 5 cents per litre of fuel. This comes into effect on April 3.
A carbon fuel levy of 9 cents a litre on petrol and 10 cents on diesel will come into effect on June5.
A petrol price increase is expected in March.
Petrol is expected to rise by another 43 cents a litre and diesel by another 62 cents a litre.
That means, by the middle of the year, motorists will be paying around R14.94 per litre of petrol and R14.22 per litre of diesel.
According to Susan Steward from Budget Insurance: “On the whole, daily living will become more expensive this year, and consumers are going to feel the pinch when filling up their cars.”
The Organisation Undoing Tax Abuse (Outa) says the new carbon levy will impact on individuals and the transport industry, pushing up the price of consumer goods along with the other fuel levy increases.
“This tax is a cynical abuse of public sentiment under the guise of tackling climate change, which is an imperative that requires urgent action,” said Heinrich Volmink, executive head of Outa’s national division.
“However, introducing a carbon fuel levy without a clear indication that this will be ring-fenced for climate change mitigation initiatives, and with no clear link to behavioural change, appears to be disingenuous.”
Just as the plastic bag tax had not changed consumer behaviour or reduced pollution, and the funds were not used for recycling initiatives as initially promised, this carbon fuel levy on petrol would just be another revenue stream for government’s coffers, he said.
Civil society organisations are concerned what effect the increases in levies would have on already cash-strapped consumers.
Mervyn Abrahams from the Pietermaritzburg Economic Justice and Dignity Group said the levies were to nullify the increases Mboweni gave to the elderly and child support grants.
“The old-age pension works exactly like a salary. A basic basket of food costs more than R3000 and pensioners receive well below that. The latest levy increases will cause a basket of food to increase, making it tough for pensioners,” Abrahams said.
The Automobile Association said the increase in fuel levies would have a huge impact on the fuel price in the months ahead, placing consumers on the back foot before any price adjustments for the rest of the year were even made.
“Even though the increases to the General Fuel and Road Accident Fund levies are lower than expected, we remain concerned that these levies are seen as the ‘go-to’ taxes for easy increases by government.
“Now, with the addition of the carbon tax on fuel, this ‘easy’ tax collection method is being further exploited, thus adding another line of tax to the fuel price,” it said.
Visvin Reddy, national convener of People Against Petrol and Paraffin Price Increase, who was in Cape Town for the budget speech, said the minister had absolutely no idea what high fuel prices meant to South Africans.
“I’m extremely upset, I feel that this Budget, especially the tax increases imposed on fuel, reflects a government that’s really not in touch with the people and their needs. It’s very insensitive,” said Reddy.
He said in the past 10 years, fuel levies and taxes had increased by 400%.
“The cost of your essential items like food and transport goes up, everything is going to go up. Even students, how are they going to find their way to university and school?”
Reddy estimated that an average household would need to allocate an additional R400 a month to accommodate the increases.