{"id":794491,"date":"2024-10-09T18:00:00","date_gmt":"2024-10-09T16:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=794491"},"modified":"2024-10-09T15:47:59","modified_gmt":"2024-10-09T13:47:59","slug":"r6-40-per-litre-petrol-price-cut-in-south-africa-and-lost-taxes","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/energy\/794491\/r6-40-per-litre-petrol-price-cut-in-south-africa-and-lost-taxes\/","title":{"rendered":"R6.40 per litre petrol price cut in South Africa \u2013 and lost taxes"},"content":{"rendered":"\n

On Tuesday, Mineral and Petroleum Resources Minister Gwede Mantashe said petrol and diesel should cost R14 per litre. However, there is no clarity on what will make up for the lost taxes.<\/p>\n\n\n\n

Mantashe told delegates at the 2024 Africa Oil Week Conference<\/a><\/strong> that his department is in discussions with the National Treasury to decrease fuel prices.<\/p>\n\n\n\n

These discussions focused on making life more affordable for South Africans and include reducing administered prices.<\/p>\n\n\n\n

Reducing administered prices aims to lower electricity and fuel prices as part of a bigger initiative to address high living costs.<\/p>\n\n\n\n

\u201cThe state must intervene to bring energy prices down in the interest of the South African community,\u201d Mantashe told delegates.<\/p>\n\n\n\n

The discussions include whether it is wise to include the fuel levy and road accident fund levy in the price of petrol and diesel.<\/p>\n\n\n\n

Taxes and levies account for R6.40 of the price of a litre of petrol and slightly less of the price of a litre of diesel.<\/p>\n\n\n\n

The R6.40 is mainly because of the R3.96 per litre fuel levy and the R2.18 per litre Road Accident Fund (RAF) levy.<\/p>\n\n\n\n

Mantashe argued that these levies distort the price of fuel. \u201cLet\u2019s find a formula to separate the price of fuel and the levies. Let\u2019s make it visible,\u201d he said.<\/p>\n\n\n\n

Most South Africans would welcome a reduction in the price of petrol and diesel. However, there is a challenge.<\/p>\n\n\n\n

The government collects a lot of money through levies and taxes on fuel. It is also a highly efficient way to collect taxes, as it is nearly impossible to evade.<\/p>\n\n\n\n

Renowned economist Dawie Roodt previously explained that the fuel levy is a \u201cless bad\u201d tax than other taxes.<\/p>\n\n\n\n

\u201cA tax on petrol is less damaging to the economy than an increase in company or personal income taxes,\u201d he said.<\/p>\n\n\n\n

The government collected R93 billion from the general fuel levy in the past financial year. Over the past decade, it has collected R730 billion.<\/p>\n\n\n\n

Should the government reduce the fuel levy or other fuel taxes, it must find the money elsewhere. This can be more damaging to the economy than high petrol prices.<\/p>\n\n\n\n

Expert opinions on petrol price plans<\/strong><\/h2>\n\n\n\n
\"\"<\/a>
Rand Merchant Bank Chief Economist Isaah Mhlanga<\/figcaption><\/figure>\n\n\n\n

Two experts, Automobile Association spokesperson Layton Beard and Rand Merchant Bank’s Chief Economist Isaah Mhlanga, shared their opinion with The Money Show<\/a><\/strong>.<\/p>\n\n\n\n

Beard said Mantashe made it sound like the Department of Mineral and Petroleum Resources wants to remove taxes and levies from the fuel price to make it more affordable.<\/p>\n\n\n\n

Lower fuel prices will positively affect the economy. People will move around more and the input costs for many products will be much lower.<\/p>\n\n\n\n

However, Beard said cutting the petrol price to R14.00 means that the government will have to raise other taxes.<\/p>\n\n\n\n

\u201cI can see National Treasury officials pushing back hard, saying fuel levies are one of the biggest taxes they collect,\u201d Beard said.<\/p>\n\n\n\n

He said the state generates around R100 billion through the general fuel levy and another R50 billion through the road accident fund levy.<\/p>\n\n\n\n

\u201cIf the government removes these two levies from the petrol and diesel price, how will it fill that gap?\u201d Beard asked.<\/p>\n\n\n\n

He said the discussions regarding administered prices most likely centre around how they can collect the money through other means.<\/p>\n\n\n\n

Despite this challenge, Beard said South Africans are angry about paying the fuel levy because they do not see the money being well spent.<\/p>\n\n\n\n

\u201cIf potholes were fixed, roads worked, and there was infrastructure development, people would not have as much of a problem to pay the fuel levy,\u201d he said.<\/p>\n\n\n\n

Another problem is widespread corruption, which many people feel is causing money to disappear into the pockets of connected people.<\/p>\n\n\n\n

Rand Merchant Bank’s Isaah Mhlanga said the government is already struggling to get enough money for all its projects.<\/p>\n\n\n\n

\u201cIt is almost unimaginable that the National Treasury will be in a position to say it will give up R150 billion when they need more money,\u201d he said.<\/p>\n\n\n\n

He added that the government would have to raise the money through tax. \u201cShifting the burden from one consumer to the next does not resolve the underlying issue,\u201d he said.<\/p>\n\n\n\n

Mhlanga expects the discussions to centre around a more efficient, market-related fuel price formula rather than completely eliminating fuel levies and taxes.<\/p>\n\n\n\n

\n\n\n\n

Read: Big announcement about petrol and diesel prices in South Africa<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Mineral and Petroleum Resources Minister Gwede Mantashe said petrol and diesel should cost R14 per litre. However, there is no clarity on what will make up for the lost taxes.<\/p>\n","protected":false},"author":93,"featured_media":784244,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9874],"tags":[3328,2241,2261,20660,2171,3114],"class_list":["post-794491","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-energy","tag-automobile-association","tag-fuel-price","tag-gwede-mantashe","tag-layton-beard","tag-petrol-price","tag-rand-merchant-bank"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/794491","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/93"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=794491"}],"version-history":[{"count":5,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/794491\/revisions"}],"predecessor-version":[{"id":794585,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/794491\/revisions\/794585"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/784244"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=794491"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=794491"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=794491"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}