Petrol tax hike warning for South Africa
The Automobile Association (AA) of South Africa has warned the government against any planned fuel tax increases in its 23 February budget, which it says will be particularly damaging following record-high increases.
The AA has also called on finance minister Enoch Godongwana to initiate a review of the current fuel pricing model.
“We know all too well of the economic challenges facing the country, and of the importance of the revenue raised through the two main levies. We are also aware that, as was the case last year, delivering a Budget in the current economic environment is tricky and difficult and that the pressure to ease the government’s financial burden is immense.
“However, increasing the levels of the General Fuel and Road Accident levies will be counter-productive as this will impact mostly on the poorest of the poor,” the AA said.
The General Fuel Levy is currently pegged at R3.93 per litre (up from R3.77 in 2021) and the RAF levy at R2.18 per litres (up from R2.07 in 2021). Combined they add R6.11 to every litre of petrol and diesel sold in the country.
Any adjustments announced by the finance minister in the February Budget Speech are implemented annually in April.
Neighbouring countries who buy fuel directly from South Africa do not add these taxes to their fuel pricing, making their fuels cheaper than it is in the country which supplies them, the AA said. 2021 saw fuel prices reach record levels and they are again touching those levels despite a decrease to fuel prices in January.
The AA said any adjustments to the collection rates of these levies will have severe consequences for consumers and they should not be altered.
“Our country faces enormous and complex economic challenges. High fuel prices are adding to these challenges and instead of accepting the current model, we must seek solutions that benefit consumers, not place them in more financial distress. One immediate solution for us, for instance, is to review the funding of the poorly managed Road Accident Fund (RAF).
“Our reliance on the RAF is a direct result of South Africa’s poor road safety and that’s where more attention needs to be given for a long-term solution,” it said.
The AA said it will also highlight that any tax increases will be viewed in the context of current spending, corruption, increases to utility fees, and increases to living costs, all at a time when more people than ever are unemployed in the country.
“We must accept that drastic intervention is needed if we are to grow our economy; one way we believe this can be done is by dealing more effectively with the fuel price than what we currently are.”
Read: Plan to scrap 5-year driving licence in South Africa – what to expect
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