As part of its recent medium-term budget policy statement, the National Treasury identified the Road Accident Fund as a potentially huge liability on South Africa’s finances.
To combat this, it indicated that large increases to the fuel levy will be needed over the next three years to avert short-term disaster.
While there has been no indication of what ‘large increase’ will mean, even ‘standard increases’ could prove to be devastating for South African consumers.
This is according to Tertius Troost, tax manager at Mazars, who says that this year’s MTBPS laid bare the harsh realities of the road that lies ahead for the South African public.
Troost said that the Road Accident Fund is in dire straits with a potential liability of R393 billion by 2021.
“The fact that Treasury actually said ‘further large increases’ could be problematic. South Africa saw a 30 cent increase in February,” he said.
“If this continues over the next three years, it adds almost a full rand to the petrol price, which will hurt not only car owners, but all public transport users.
“As it stands, Treasury has no more chances to increase the VAT rate again in the near future, which means that the country will have to live with the consequences of that decision for the next few years.”
Currently, taxes make up almost 40% of the total petrol price (R5.34) with the RAF component making up R1.93 of that.
Over the last decade, the tax component of the petrol price has increased over 200%, with the RAF levy growing 315%.