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Fuel price tax holiday or not, April’s prognosis is not looking good

Expensive fuel is here to stay, even if there is a tax holiday. File picture: Courtney Africa/African News Agency (ANA).

Expensive fuel is here to stay, even if there is a tax holiday. File picture: Courtney Africa/African News Agency (ANA).

Published Mar 30, 2022

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Johannesburg - With South African fuel prices spiralling out of control, the Department of Mineral Resources and Energy is said to be considering a fuel tax holiday.

According to BusinessTech, the Parliament Portfolio Committee on Mineral Resources and Energy has called for an immediate response to this crisis, which could mean that the current levies are partially or fully scrapped for the months of April and May as a temporary relief measure.

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Fuel taxes currently account for R6.11 of every litre of petrol and diesel sold in South Africa, with the general fuel levy amounting to R3.91 and the Road Accident Fund swallowing R2.18.

While it’s not clear whether the proposed fuel tax holiday will be implemented, and even if it is South Africans are still facing steep petrol and diesel prices in April.

According to late month unaudited data released by the Central Energy Fund, the price of 93 Unleaded petrol is looking set to rise by around R1.70 next month, while 95 Unleaded is set to go up by around R1.80.

Those with diesel-powered vehicles have it far worse, with the late-month data projecting an increase of about R3.10 for low-sulphur diesel and just under R3.00 for the dirtier 500ppm.

That means that if there is no fuel tax holiday, South Africans will be paying in the region of R22.68 for 95 Unleaded at the coast and R23.40 in the inland regions, where the cheaper 93 ULP will retail for R23.05.

Diesel wholesale prices would rise to around R22 at the coast and R22.50 inland, keeping in mind that diesel is unregulated so you’ll be paying somewhat more than that at the pumps.

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But even if government introduces a fuel tax holiday in April, at most it would remove R6.11, which would still result in 95 Unleaded costing R16.57 at the coast and 93 Unleaded retailing for R16.94 in the inland regions - which is far from cheap. In the more likely scenario of a partial tax break, let’s say R3.00 for argument’s sake, petrol will still cost R19.57 at the coast and R19.94 inland.

However even if there is a fuel price holiday, it’s only going to be a temporary fix.

Unless international oil prices subside substantially in the coming months, which would likely depend on an end to the Russia-Ukraine conflict, fuel will continue to be critically expensive, both in South Africa and abroad.

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However, separately from any short-term tax holidays or international oil price movements, South Africa’s government is under pressure to review the current fuel price structure.

Thankfully there is some hope on the horizon in that regard. Following extensive petitioning by the Automobile Association, Finance Minister Enoch Godongwane announced during his Budget Speech in February that there would be a “review of all aspects of the fuel price”.

IOL Motoring

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