Johannesburg - Finance minister Malusi Gigaba faces an unenviable task when he delivers his budget speech on 21 February; he’s inherited a 2017 shortfall of R50 billion, and he’s under pressure to provide free services in health and education that he just can’t afford.
And the Automobile Association is worried that some of it is going to come out of motorists’ pockets in the form of an increase in the General Fuel Levy and and Road Accident Fund levy, which are included in the price of every litre of petrol or diesel we buy.
The problem is that neither of these funds is ring-fenced, so there’s no guarantee that any increases in these ‘hidden taxes’ will go towards propping up the overstressed Road Accident Fund or softening the impact of fuel price volatility.
Soft target
They may look like a soft target, but the AA is urging government (in this case, that’s you, Mr Gigaba) to be mindful that any more hikes in these levies will affect the poorest of the poor more than anybody else, because they rely on public transport - and the operators of that public transport, are going to pass their increased operating costs straight on to the people who can least afford it.
“Road users in general are already under enormous financial strain,” said the AA’s Layton Beard. “A big increase to these levies will place an even greater burden on them.”
As of now, the General Fuel levy is R3.15 and the Road Accident Fund levy R1.63 - together they make up about a third of the price of every litre of fuel. That’s because, each year since 2013 the increase in the levies has been way higher than the rate of inflation.
That year the average CPI was 5.7 percent, but the levies went up more than eight percent.
In 2015 the levies were hiked by a massive 24.7 percent, while inflation ended on 4.6 percent. In 2016 there was an increase of almost 7.33 percent compared to an average annual inflation of 6.4 percent, and last year the levies went up by almost nine percent while inflation fell back to 4.6 percent year on year.
“Clearly the increases in the levies outstrip inflation considerably,” said the AA, “Motorists and road users are getting the feeling that they are seen as an easy source of revenue, at a time when they are having to tighten their belts.
“Which is why we are advocating for increases to the levies in line with average inflation of around six percent. That’ll bring the combined levies up to R5.07 a litre, hiking the price of fuel by 29 cents a litre across the board.”
“Any levy increases higher than inflation will cause significant increases in the cost of mobility, whether the wheels are yours or public transport,” cautions Beard. “We cannot support such hikes and urge government to make their decision carefully.”