Minister of Finance, Tito Mboweni, will deliver the Budget Speech 2019 in Cape Town on 20 February.
Expectations are high that he will balance competing expenditure priorities to stimulate economic growth in spite of fiscal consolidation measures.
However, the former central banker’s task is formidable and he will likely have a difficult balancing act on his hands.
One of the key balancing acts will be how Mboweni tackles the issue of the fuel levy.
In an analysis of the upcoming budget, PwC tax experts noted that the general fuel levy has been increased significantly in each of the four previous budgets as a means of raising additional tax revenues.
“The general fuel levy is only slightly progressive and was previously seen as being less politically sensitive than VAT,” PwC said.
“This perception has, however, changed with the increased attention resulting from the VAT increase in 2018. As such, it may no longer be seen as a viable option for government to raise additional revenues.”
“Increases are therefore likely to be limited to inflation. We therefore expect the general fuel levy to be increased by between 15c/l and 20c/l.”
South African motorists are also likely to see an increase in the RAF levy.
In the 2018 medium-term budget speech,= it was stated that the liability of the Road Accident Fund (RAF) is expected to grow to R393 billion by 2021/2022 and that the RAF would require further large increases to the fuel levy in each of the following three years, PwC said.
“We anticipate an increase of at least 30c/l in the RAF levy, in line with the increase in the 2018 Budget”.