Why government refuses to use a fuel levy for e-tolls

South Africa’s government says that it rejected a fuel levy to fund e-tolls in Gauteng “due to its indiscriminate nature”.

It called a fuel levy an ‘anti-poor form of tax’.

Last week, Deputy President Cyril Ramaphosa announced a new payment model for e-tolls in Gauteng, which will see a monthly cap adjusted to R225, from R450 previously.

The current 58 cents per kilometre will be reduced to 30 cents per kilometre for people using e-roads, while motorists will have to pay their outstanding e-tolls upon renewal of vehicle licences.

The response from Gauteng motorists, who have largely rejected the system, has been predictable, while lobby group Outa (Opposition to Urban Tolling Alliance)  said that the new dispensation “is tantamount to putting lipstick on a pig”.

“People will not be seduced or coerced,” said Outa chairman Wayne Duvenage.

He said that a 10 cents per litre increase in the fuel levy in 2007 would have covered the cost of the improvement of the Gauteng freeways and would have resulted in the capital cost of the project being settled by now.

Why did you not use the fuel levy – it has been increased after all?

The government said that the advisory panel’s findings and recommendations reaffirmed the user-pays principle. It said that the fuel levy is already being used as part of general taxation to raise revenue to meet the country’s financial needs and obligations.

This year saw a substantial increase in the fuel levy to address the fiscal pressures. The fuel levy is not ring fenced or earmarked for a specific budget item.

Treasury announced a 30.5 cents per litre rise on the general fuel levy in February, and an additional 50 cents for the Road Accident Fund.

“Due to its indiscriminate nature, a fuel levy can be an anti-poor form of tax. In a country like ours where the majority live far from their places of work, this would definitely impact the working class more as it would be impossible to exclude public transport – their preferred mode of transport,” the government said.

Also, it said that the average fuel consumption per vehicle is declining every year as a result of improvements in vehicle engine technology and the introduction of alternate fuel vehicles.

“The relative revenue per vehicle is therefore declining. In the long term, this is not a sustainable solution,” it said.

The advisory panel has dealt with this issue and correctly advised against its application.

“A provincial fuel levy would be approximately 3.44 times higher than a national fuel levy, without considering the potential of reduced fuel sales due to vehicles rather filling up outside the province,” the government said.

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Why government refuses to use a fuel levy for e-tolls