The Fuels Industry Association of South Africa is submitting proposals to the finance minister and National Treasury to raise taxes on paraffin and align them with diesel.<\/p>\n\n\n\n
This would see taxes on the fuel more than tripling, adding almost R6 to the price.<\/p>\n\n\n\n
This is to eliminate diesel adulteration, which costs the industry about R3 billion each year.<\/p>\n\n\n\n
The association said that diesel adulteration has been a persistent issue for years but has rapidly escalated since 2019.<\/p>\n\n\n\n
So-called ‘dirty diesel’ is diesel that has been diluted with illuminating paraffin (IP).<\/p>\n\n\n\n
The contaminated fuel fails to meet regulatory standards and poses a risk to vehicles by degrading engine performance and causing long-term damage.<\/p>\n\n\n\n
The illegal blending of diesel with paraffin is driven by the tax advantages paraffin enjoys in South Africa.<\/p>\n\n\n\n
Unlike diesel and petrol, Paraffin is not subjected to the heavy taxes that fuel products typically face.<\/p>\n\n\n\n
Unscrupulous businesses exploit this tax disparity to boost profits, blending paraffin with diesel and selling it at a lower price to attract customers.<\/p>\n\n\n\n
The association has now put forward a comprehensive proposal to tax illuminating paraffin at the same level as diesel.<\/strong><\/p>\n\n\n\n “By applying the full duties and levies applicable to diesel, we believe this measure will eliminate the economic incentive for unscrupulous operators to continue this practice.<\/p>\n\n\n\n “This approach has the potential to bring the illegal adulteration of diesel to a halt,” it said.<\/p>\n\n\n\n Taxes and levies account for R8.34 of the price of a litre of diesel in South Africa.<\/p>\n\n\n\n The fuel levy and the Road Accident Fund (RAF) levy account for the bulk of this, but there are various charges that make up the total.<\/p>\n\n\n\n By contrast, illuminating paraffin is only subject to R2.46 in taxes – largely because the general fuel levy and RAF levy do not apply.<\/p>\n\n\n\n Hiking paraffin taxes to diesel levels would require a 240% hike in taxes on the fuel – or more than triple the tax.<\/p>\n\n\n\n Because illuminating paraffin is used by poorer and indigent households as a source of fuel, the proposal required further measures – such a giving back some of the revenue generated from the higher tax back to these households through the South African Social Security Agency (Sassa) grant system.<\/p>\n\n\n\n “This ensures that the most vulnerable members of our society are not adversely affected by the increased cost of paraffin,” it said.<\/p>\n\n\n\n The association said its approach will not only curb the illegal adulteration of diesel but also ensure that the state recovers the duties and levies rightly due. <\/p>\n\n\n\n “It is a practical and effective solution that addresses both the economic and social dimensions of this issue,” it said.<\/p>\n\n\n\n SARS on the case<\/strong><\/p>\n\n\n\n The issue of dirty diesel has been flagged by the resources department several years, and the issue has now gained the attention of the South African Revenue Service (SARS).<\/p>\n\n\n\n The taxman raided a suspected multibillion-rand player in this area earlier this month, shutting down two depots, one in Limpopo and another in Gauteng.<\/p>\n\n\n\n These facilities are reportedly owned by a group with operations of a staggering scale.<\/p>\n\n\n\nLevy<\/th> 0.05% Diesel (cents)<\/th> Paraffin (cents)<\/th><\/tr><\/thead> Basic Fuel Price<\/strong><\/td> 1,011.63<\/strong><\/td> 1,012.13<\/strong><\/td><\/tr> Fuel Tax<\/td> 384.00<\/td> 0.00<\/mark><\/td><\/tr> Customs and Excise<\/td> 4.00<\/td> 0.00<\/mark><\/td><\/tr> IP Tracer Dye Levy<\/td> 1.00<\/td> 0.00<\/mark><\/td><\/tr> Pipeline Levy<\/td> 0.33<\/td> 0.00<\/mark><\/td><\/tr> Road Accdent Fund<\/td> 218.00<\/td> 0.00<\/mark><\/td><\/tr> Zone Differential<\/td> 82.80<\/td> 103.00<\/mark><\/td><\/tr> Wholesale Margin*<\/td> 89.61<\/td> 89.61<\/td><\/tr> Secondary Storage<\/td> 36.60<\/td> 36.60<\/td><\/tr> Secondary Distribution<\/td> 17.20<\/td> 17.20<\/td><\/tr> Slate Levy (October)<\/td> 0.00<\/td> 0.00<\/td><\/tr> Total Taxes<\/strong><\/td> 833.54<\/strong><\/td> 246.41<\/strong><\/td><\/tr> Total Price<\/strong><\/td> 1,845.17<\/strong><\/td> 1,265.94<\/strong><\/td><\/tr><\/tbody><\/table><\/div>
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