File photo: African News Agency (ANA) Archives
File photo: African News Agency (ANA) Archives

South Africans are taxed to death but legendary 42 isn't our number

By Meyer Benjamin Time of article published Mar 6, 2019

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For fans of the late Douglas Adams’ The Hitchhiker’s Guide To The Galaxy this will make perfect sense.

For those unfamiliar with this work, well, basically a computer called Deep Thought was asked for the meaning of “Life, The Universe and Everything”.

Seven-and-a-half million years later, Deep Thought spat out the answer: 42.

For years Douglas Adams’ fans (the cruel would say geeks) have come up with reasons ranging from esoteric to entertaining as to why the answer was 42.

But never mind that.

In a case of rather scandalous symmetry, 42 is also now the percentage of taxes we pay on fuel (approximately), and on new vehicles. Notably following Tito Mboweni’s Budget speech.

Now the need is great in South Africa and resources are few, and there’s a ravenous fiscus to feed.

The fact that Croesus-like amounts of money have been lost to corruption is out of the scope of this short piece.

But back to the Budget.

Followers of things financial will have long since read the breakdown, and be aware that Sin Taxes were raised on alcohol and tobacco. They always are.

But there’s another Sin Tax at work. A more insidious one: fuel.

By early June we’ll be paying 29cents a litre more in taxes for petrol, 30c a litre more for diesel. More specifically, motorists will be coughing up R5.63 in tax on every litre of petrol, and R5.49 for every litre of diesel. In taxes alone.

This is simply scandalous, and doesn’t factor-in upcoming fuel price increases. So while the motorist has long been a go-to cash cow for the government, it overlooks the catastrophic knock-on effect it has on the poor in everything from food to taxi fares.

And in a country like South Africa - which has the world’s highest Gini coefficient - with its unequal, apartheid-legacy spatial development and long distances for the economically disadvantaged to travel, it’s, well, sinful.

Never mind the official unemployment rate of 27.1 percent.

Some say it’s actually around 40 percent. Close to that magical 42 figure. And if you speak to some of those unemployed living in extreme poverty, the dispossessed who’ve almost given up hope, they’ll tell you that one of the reasons they don’t even bother looking for the most humble, daily work anymore is that, first, there often isn’t any.

Second? Well, second they simply can’t afford to travel from their far-flung homes to actually go and look for work.

Just another reason to disabuse ourselves of the notion that if the poor worked just a little harder and weren’t so lazy, well, they too would live in leafy suburbs with SUVs in the driveway.

As for those fuel taxes, the general fuel levy will be hiked by 15c a litre for both petrol and diesel from April 3; the Road Accident Fund levy will go up by 5c a litre, also from April 3. And from June 5 there’ll be a new carbon tax of 9c a litre on petrol and 10c a litre on diesel.

The last is doubly shocking.

First, exactly how this carbon tax will be administered or what it will be used for appears nebulous. Second, even those who’ve bought vehicles exempt from carbon tax in the purchase price will now suffer, too.

Meanwhile, Andrew Kirby, the engaging president and chief executive of Toyota South Africa Motors, recently pointed out that 42percent of the purchase price of vehicles between R200 000 and R900 000 is made up of taxes. These include import duties, ad valorem tax, VAT, CO2 tax, and the tyre levy and is, in Kirby’s accurate words, “dramatic”.

Indeed, perhaps it’s time to coin a new phrase: “car-ruption!”

Now there are no quick fixes.

The ANC is certain to sweep the upcoming elections. Probably by a reduced majority of around 4.2percent (no, not 42).

In the short-term, at least, it seems likely that we can expect more of the same. I do, however, expect the market for affordable, economical cars to continue to mushroom.

But this remains the miracle country. Adversity has always bred strength and innovation in South Africans. The rand, too, is chronically undervalued, and once post-elections it corrects to its real value of around R10 or R11 to the dollar, the price of our imported oil will plummet.

This nation also has a remarkable history of resilience.

But above all, one thing is certain - 42 isn’t the right answer for South Africa.

Car industry veteran and commentator Meyer Benjamin is the director of the Ipop (In People Our Passion) Motor Group, which includes four Suzuki dealerships, a Mazda dealership, six Ipop used car dealerships, and a Haval dealership.


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