File photo: Luke Macgregor / Reuters
File photo: Luke Macgregor / Reuters

Govt shoots down appeals to reduce fuel levies

By Bongani Nkosi Time of article published Jul 6, 2018

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Johannesburg - The government has shot down appeals to consider reducing the fuel levy as petrol hikes start to bite consumers. A litre of 95 octane in Gauteng jumped to a shocking R16.02 this week, increasing by 23 cents. Fuel price increases have been continuous for the past several months, causing transport fares to shoot up.

Putco shocked its commuters in June by announcing a second round of increases this year. Taxi commuters travelling between Pretoria and Johannesburg were slapped with R5 increases per trip this week. Both Putco and the taxi industry have blamed the increasing fuel prices for their increases.

The Automobile Association this week pointed out that the 52 cents a litre increase in the fuel and Road Accident Fund levies announced by Treasury in February were also hurting consumers. This entailed a seven percent or 22 cents increase to the fuel levy, from R3.15 to R3.37 - and also an 18 percent rise in the RAF levy that moved from R1.63 to R1.93. The hikes came into effect on 1 April, along with the increase of VAT from 14 to 15 percent.

Reprieve needed 

Consumers could do with reprieve in the fuel and RAF levy, said AA spokesman Layton Beard.

“We are paying too much for petrol and it could still get worse,” he said. “It would be ideal for the South African government to reconsider the R1.93 levy motorists pay towards the Road Accident Fund per litre and the R3.37 levy paid per litre to the general fuel levy.”

The governing ANC also called on its own government to “seriously consider freezing or decreasing the fuel levy”. Spokesman Pule Mabe said: “Fuel price hikes impact directly on the lives of the poor as the monopolistic food outlets pass the transport costs to them. The energy cost also increases. The rate at which these cost increases are happening is unbearable and we can neither turn a blind eye nor wish them away. We need to take strong action to arrest this situation.”

'Not an option'

But the Economic Cluster ministers said on Friday reducing the fuel and RAF levy was not an option, as the government hoped the February increases would bring in an extra R1.2 billion for the fiscus.

"Government has noted with concern the growing debate about the need to tamper with the Fuel Levy and the Road Accident Fund,” said the ministers. We remind stakeholders that all economies of our size, that do not produce oil, levy a tax on fuel as one of the most efficient instrument of raising revenue for governments worldwide - including South Africa.

“This is revenue that is used for amongst others for the compensation of victims of vehicle accidents and generally for the improvement of road infrastructure and other societal needs. And it is for this reason that a direct comparison of fuel pricing within the region is not possible, as our developmental taxation system is not the same as those of our regional counterparts."

The ministers said the main contributor to the fuel price increases in South Africa was the sharp increase in international crude oil and refined petroleum product prices. They called on all sectors “to be circumspect prior to increasing prices as a result of the prevailing fuel prices”.

“In particular government calls upon retailers and food processors take into consideration the negative impact increases to their products may have on the most vulnerable.”

The Star

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