Civil society group Outa has published a breakdown of South Africa’s fuel taxes as the country faces record high petrol prices.
In an opinion column for the Daily Maverick, Outa chief executive Wayne Duvenage said that the price of petrol in South Africa is not only subject to the price of fuel when it lands in the country, but also eleven other components lumped into the cost per litre of petrol and diesel sold to the consumer.
“All of these components, taken together, have a significant impact on the price of this important commodity,” he said. “Retailers, wholesalers, and logistics companies of all sorts absorb such growing costs by shifting it downstream – increasing the cost of living for all citizens.”
“When one looks back at the trends of these various ‘additional levies’ and what lies ahead for the sale of petrol and diesel in a changing vehicle propulsion environment, these additional taxes and levies appear to be unsustainable.”
More worrying is the ratio of the Basic Fuel Price (BFP) versus these other levies and taxes in the total price of petrol, Duvenage said.
This ratio has become inverted over the past decade, suggesting that the state should heed the impact they have on the country’s competitiveness through the over-taxation of petrol, he said.
“The Basic Fuel Price (BFP) fluctuates rather significantly on a monthly basis, due to the two influencing factors of the rand/US dollar exchange rate and the international market price of Brent Crude oil.
“However, virtually all the other components making up the price of petrol and diesel are static on a monthly basis, barring an annual increase applied to the respective elements.
“Following years of constant increases, the total of these ‘additional levies’ comprise the bulk of the price of fuel, which was not the case too long ago. ”
The graph below shows how the fuel price and taxes have effectively become inverted over the last 10 years.
Duvenage said that the time for the state to review its incessant tax increases onto various commodities is overdue.
“New innovative taxes that will introduce sustainable revenue streams, whilst protecting the economy from tax saturation and stagflation, is required.
“The involvement of civil society is essential in this process, as the state is often very blinked and applies short-term thinking when exploring new revenue streams, as it did with the eToll scheme and continues to do with the SABC TV License fees.”
He added that increased rates and taxes must be justified by demonstrably rational use.
“We have seen quite the opposite. Further, global environmental and technological changes that warrant a just transition to biophysical sustainability cannot be pitted against our leaking public purse.”