In addition to the increased cost of living and the high cost of vehicles, South African drivers are also paying for heavily taxed fuel, says National Automobile Dealers’ Association (NADA) chairperson Mark Dommisse.
“It is the biggest single cost factor for most transport operators and improving the quality of fuel to suit the latest low emission engines seems to have been put on the backburner,” he said.
Taxes and levies on fuel presently make up almost 70% of the fuel price. The Basic Fuel Price (BFP), which is made up of the international oil price combined with the rand/US dollar exchange rate, made up the largest component of the fuel price between 2009 and 2014.
However, according to lobby group Outa, the government’s increasing taxes and levies applied over the past decades – as well as a big drop in the oil price in April 2020 – has resulted in the BFP component now accounting for only about 30% of the retail fuel price.
The various taxes and levies that make up the “non-petroleum related costs” comprise the fuel levy, Road Accident Fund, wholesale and retail profit markings, and a few smaller transport and storage costs.
Outa said that in 2009 the combined value of these charges amounted to R3.61 or 49% of the total retail fuel price. Currently, it stands at R9.48 and makes up 68% of the fuel price, despite the reduction in the international oil price.
“Organisations such as Outa repeatedly call on the government to stop continually using fuel levy increases as a means of boosting the fiscus, as it is another force impacting negatively on the country’s economic recovery,” said Dommisse.
Data from the Central Energy Fund (CEF) points to another large fuel hike for South African motorists in February, following a significant increase in January.
The latest CEF data shows an under-recovery in prices across the board, expected to rise around 81 cents per litre for petrol, and 58 cents per litre for diesel.