Photo: Pixabay
Photo: Pixabay

Slew of tax hikes and fuel increases waiting for consumers down the line

By Supplied Time of article published Mar 5, 2019

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South African consumers, already up to their necks in debt, are in for another shock over the next few months.

On Wednesday next week (March 6) petrol is expected to rise by 75 cents a litre while diesel could spike by as much as 92 cents a litre while illuminating Paraffin will increase by 74 cents a litre.

In addition to the fuel price increase – which economists ascribe largely to the weaker rand and rising crude oil price – a number of taxes and levies are also about to kick in.

Dawie Roodt, chief economist of the Efficient Group, said consumers are also about to be hit by higher toll fees, new taxes and hikes in three existing taxes between March and June.

“The rise in tolls by SANRAL on top of the fuel price hike is going to affect all South Africans thanks to the fact that most freight is now transported by road because of the total collapse of the freight rail network under the stewardship of a corrupt and bankrupt Prasa,” Roodt said.

The increase to the General Fuel and Road Accident Fund levies which will apply in April is going to add significantly to the pain that consumers will have to endure, Roodt said.

 Neil Roets, CEO of one of South Africa’s largest debt counselling companies, Debt Rescue, said the introduction of the carbon tax on April 1 as well the refusal by the National Treasury not to move the country’s tax brackets in line with inflation, is going to mean that most tax payers will end up paying more in taxes leaving less cash to spend on essentials like food and clothing.

From April 2019, the General Fuel Levy will increase by 5 cents per litre, and the Road Accident Fund Levy will increase by 15 cents per litre;

From June 2019, the Carbon Tax will be introduced, adding 9 cents per litre to the petrol price and 10 cents per litre for diesel.

Roets said it was highly likely that more motorists would skip paying toll fees because they had substantially less money to spend.

The R69-billion that has been granted to bail out a bankrupt Eskom over the next three years would eventually have to be funded by tax payers who are already at the end of their tether.

With more than a quarter of South Africa’s workforce unemployed – and little or no hope existing that this picture will change anytime soon – Roets said they were gearing up for one of the busiest periods in the history of Debt Rescue.

“We keep talking about the perilous state of indebted consumers but I often get the feeling that the government is simply not listening – hence the fact that it keeps massively overspending and continues to squeeze consumers ever harder to fund their massive expenditures.

Roets said the one spark of light on a very dark horizon was the comment by auditing firm PwC that warnings issued by debt experts such as himself and others had somewhat curbed consumer spending.

“The reality is that South Africans have now been reduced to buying food on credit and while there is still substantial expenditure on luxuries, a growing number of deeply indebted consumers are being pushed into a corner where debt counselling is their only solution.”

Roets said that with unemployment now at above 27%, key jobs sectors including mining and the industrial sector are expected to continue shedding jobs at unprecedented rates in 2019 despite the best efforts by President Cyril Ramaphosa to turn around the situation.

Plans for the ANC’s great land grab are advancing at a pace with foreign investors spooked to the point that very little foreign direct investment needed to create jobs is coming into the country, Roets said.

“Total consumer debt now stands at close to R1,73-trillion (according to the latest figures released by the reserve bank) which clearly shows that South African consumers have not cut back on spending significantly. A recent World Bank index has also shown that South Africa is one of the most indebted countries in the world.”

He said almost half of all consumers were three months or more behind in their payments. The major culprits are credit and store cards followed closely by unsecured debt.

The only measure of relief for consumers who are in over their heads is the legally-binding system of debt review which allows deeply indebted consumers to repay their debts over a longer period of time in smaller instalments often at a discount.

“Lenders are sometimes willing to take a cut if it means they can avoid having to involve debt collectors or foreclosing on the fixed properties of debtors.” Roets said.


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