Civil society group Outa has written to finance minister Enoch Godongwana, calling for a halt to the annual increase in the fuel levies. The levy increases are announced in February every year in the national budget and typically take effect on 1 April.
“While we understand that we are a cash-strapped nation, we can no longer afford to burden society with higher taxes and levies applied to the price of fuel,” said Wayne Duvenage, Outa’s chief executive.
“We have witnessed substantial increases to the price of petrol and diesel, as a result of ongoing above-inflation increases to the basket of 12 other levies and charges, which have collectively increased by over 125% over the past decade.”
Duvenage said that these increases had been well above inflation. The result is a compounding effect that makes the collective cost of levies and surcharges more than R10 per litre of petrol before the basic fuel price is added.
The below graphic, provided by Outa, gives an overview of how fuel taxes over the past decade and what South Africans are currently paying in taxes:
- Fuel levy: R3.83
- Road Accident Fund Levy: R2.13
- Wholesale margin: R0.41
- Retail margin: R2.23
- Other levies such as carbon tax, slate levy and transport costs: R1.43
- Total: R10.03
While the weak rand and the high international cost of Brent crude oil are the main factors that currently contribute to the highest ever prices for petrol in South Africa, the country has experienced much higher prices for oil in the past, Outa said.
“A decade ago in 2011/12, the average price for Brent crude was $114 per barrel, some 36% higher than it is today.
“Fortunately, at that time, our currency was a lot stronger at R7.41 to the US dollar, compared to last month’s average of R15.85. It is, therefore, a combination of our weak currency and the ongoing increases to levies which gives us our highest price of petrol today.”
Outa said that the combination of the fuel levy and road accident fund (RAF) levy feed roughly R135 billion per annum into the National Treasury’s coffers. This figure was around R55 billion a decade ago, it said.
The civil society group said that the government is extracting enough from society from these two levies and should seriously consider not increasing these levies in 2022 to cushion the impact of higher-than-inflation increases from the past.
“Instead of reaching out to extract higher taxes from the citizens every year, the government should look for savings and improved productivity and other efficiencies within the state’s spending and processes,” said Duvenage.
“To add another hike in fuel taxes in 2022 would be a slap in the face of overstretched citizens and would add more burden to everyone in the country.”