FINANCE Minister Enoch Godongwana’s announcement that there will be a review of the fuel price has been warmly welcomed.
Civil society groups and academics in the economics field said this, along with tax rebates and a business relief scheme, had seen Godongwana start on a good footing in his maiden Budget speech yesterday.
But they stressed that there was a long way to go before determining whether he would succeed as there was a lot of rebuilding needed to restore business confidence in the country.
Regarding the fuel price, Godongwana announced that no increases will be made to the general fuel levy on petrol and diesel for 2022/23 – providing tax relief of R3.5 billion – and there would be no increase in the Road Accident Fund levy.
He also said that he and Energy Minister Gwede Mantashe had agreed that a review of all aspects of the fuel price was needed.
“Our teams have already begun to engage on this critical work.”
Layton Beard, spokesperson for the AA, said that it was a landmark win for consumers regarding the decision not to increase fuel levies.
“Currently, these levies combine to add R6.11 to every litre of fuel sold in the country. The AA called on the minister not to increase these levies – as such increases would be damaging to the economy, hard on the poor, and would lead to increases to goods and services across the board, especially as fuel prices are slated to once again reach record levels in March.”
Beard said that while fuel prices might still increase, the additional burden of higher taxes is now out of the way.
“In addition, Minister Godongwana’s announcement that he and Mineral Resources and Energy Minister Gwede Mantashe have agreed to review all aspects of the fuel price is an equally welcome development.
“We launched an online petition which secured 35 000 signatures to urge the government to #ReviewTheFuel and the fact that teams from the departments of Finance and Minerals and Energy are engaging to make this happen is a great victory for consumers.”
Pietermaritzburg Economic Justice and Dignity Group’s Mervyn Abrahams said he welcomed the move on the fuel price.
“The fuel price has an impact on everyday life across the board and therefore it is important to ensure that the price does not negatively impact on the most vulnerable,” said Abrahams.
The minister said restructuring the corporate income tax system was an important part of the government’s efforts to create a conducive environment for businesses to grow, increase investment and to employ more people.
Therefore, the employment tax incentive would be expanded through a 50% increase in the maximum monthly value to R1 500.
In addition, he said as announced in the 2021 Budget, the corporate income tax rate will be reduced from 28% to 27% for companies with years of assessment ending on or after March 31, 2023.
Dr Sanele Gumede, a lecturer in economics from the University of KwaZulu-Natal, said he was encouraged by the minister’s commitment to assist small businesses with the announcement of a new business bounce-back scheme.
“Covid-19 left many businesses devastated and it is good that small businesses have been identified as needing help but the qualifying criteria must be such that there is no business that is left outside,” said Gumede.
UCT academic Dr Ntokozo Nzimande noted how Covid-19 had affected employment with some people losing their jobs while others worked shorter hours, adding that this was one of the reasons that the corporate tax break was welcomed.
“One of the important features in the Budget was the additional funding provided to the police and the justice department. Beefing up those departments is crucial in the context of safety for both individuals and businesses,” said Nzimande citing last July’s riots as a case in point.
THE MERCURY